Now up 146 points to 9,217
NEW YORK (AP) — Upbeat corporate earnings are giving stocks
another burst of energy.
Stocks surged Thursday as investors jumped on better-than-expected
profit reports and a surprise drop in unemployment.
Major stock indexes rose more than 1 percent, including the Nasdaq
composite index, which crossed 2,000 for the first time since
October. The Dow Jones industrial average jumped 130 points.
Investors looked to stronger earnings as a good sign about the
direction of the economy. Motorola Inc. reported a profit although
it was expected to post a small loss, and MasterCard Inc. posted
earnings that topped expectations.
General Electric Co. jumped after a Goldman Sachs analyst raised
his rating on the stock and predicted the industrial conglomerate
won’t have to split off its lending arm due to a financial sector
reform proposal in Congress.
“There are some specific stock stories that are getting people
involved and making people confident,” said Nick Kalivas, vice
president of financial research at MF Global in Chicago.
Traders also welcomed a report that the number of Americans
continuing to collect unemployment benefits unexpectedly fell last
week to 6.2 million. Economists polled by Thomson Reuters had
expected that figure to rise to 6.3 million from 6.23 million last
week.
Investors have been following revenue figures and profit forecasts
from companies to determine when consumers might start spending
again. Colgate-Palmolive Co.’s profit report was typical: Earnings
rose 14 percent even as sales fell because the consumer products
maker was able to cut costs.
“This is what happens first, people have to get their cost
structure in-line, and we’re seeing that with the earnings that are
coming out,” said Brett D’Arcy, chief investment officer at CBIZ
Wealth Management Group.
In midday trading, the Dow rose 133.39, or 1.5 percent, to
9,204.11. The Standard & Poor’s 500 index rose 15.33, or 1.6
percent, to 990.48. The index hasn’t traded above 1,000 since
November.
The Nasdaq advanced 25.61, or 1.3 percent, to 1,993.37. It rose to
nearly 2,010 in morning trading, its first move above 2,000 since
Oct. 3. The index is up more than 55 percent from its low of 1,269
in March.
The advance is the latest in a rally that began July 13 when
companies started reporting profits that exceeded analysts’ modest
expectations. The rally had stalled in the last four days but major
stock indicators are still up 11 percent since the advance
began.
About 2,400 stocks rose on the New York Stock Exchange compared,
while only about 500 that fell. Volume came to 593.1 million
shares, compared with 445 million traded at the same point
Wednesday.
Among companies reporting earnings, Motorola rose 48 cents, or 7.3
percent, to $7.05. MasterCard rose $11.80, or 6.3 percent, to
$200.35. Colgate fell $3.19, or 4.2 percent, to $72.66.
GE rose 92 cents, or 7.5 percent, to $13.18.
The gains in stocks weakened demand for the safety of government
debt. Bond prices slipped, pushing yields higher. The yield on the
benchmark 10-year Treasury note rose to 3.70 percent from 3.67
percent late Wednesday.
The drop comes ahead of an auction later Thursday of $28 billion of
seven-year notes. Weak demand at auctions earlier this week raised
concerns that the government might have to offer higher returns on
bonds to lure in investors, which would have the negative effect of
raising borrowing costs on loans such as mortgages.
Light, sweet crude rose $2.67 to $66.02 a barrel on the New York
Mercantile Exchange.
The dollar mostly fell against other major currencies, while gold
prices rose.
The Russell 2000 index of smaller companies rose 9.35, or 1.7
percent, to 557.73.
Overseas, Japan’s Nikkei stock average rose 0.5 percent. In
afternoon trading, Britain’s FTSE 100 gained 2 percent, Germany’s
DAX index rose 1.7 percent, and France’s CAC-40 rose 2.1
percent.
