Thursday Dow Surges On Upbeat Earnings, Employment Reports

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.

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