Closing Bell: Tech Earnings Send Stocks Higher; Microsoft Leads Dow

×
APTOPIX Wall Street (Specialist Peter Giacchi, center, calls out prices during the IPO of Sprague Resources on the floor of the
Richard Drew/AP

NEW YORK -- Strong third-quarter results from technology companies drove investors into stocks on Friday, giving the market its third straight weekly gain.

After reporting results that topped expectations, Microsoft (MSFT) rose 6 percent and Amazon.com rose 9 percent. The Dow (^DJI) rose 61 points, or 0.4 percent, to close at 15,570. The Nasdaq composite (^IXIC) rose 14 points, or 0.4 percent, to 3,943, the highest it's been in 13 years. And the Standard & Poor's 500 (^GPSC) rose 7 points, 0.4 percent, to 1,759, another record high.

The gains were broad. All 10 industry groups in the S&P 500 rose, led by telecommunications with an increase of 1 percent.

Most companies that have reported third-quarter earnings are beating financial analysts' estimates. Even so, earnings for companies in the S&P 500 index are expected to grow just 4.5 percent over the same period a year ago, according to S&P Capital IQ, a research firm. At the start of the year, earnings were expected to rise at more than twice that pace.

Some market watchers are calling for caution, saying that a significant part of the profit growth has come from cutting expenses, not increasing revenue, as the global economy remains sluggish.

"The question is: What is the outlook for earnings?" Steven Ricchiuto, chief economist at Mizuho Securities, said. "There is only so much you can do with cost-cutting."

Major U.S. stock indexes have soared this year. The S&P 500 is up 23 percent, the Nasdaq composite 31 percent. In addition to higher earnings, investors have been encouraged by continued economic stimulus from the Federal Reserve. Many had expected the Fed to pull back from its stimulus before the end of year, but now think the central bank will hold off until next year, possibly until March.

The Fed is buying $85 billion worth of U.S. government and other bonds with the aim of keeping interest rates low.

The stimulus program has helped investors brush aside a few warning signs about the market. Stocks look fully priced by some measures comparing them to earnings, for instance. And revenue growth is slowing. Revenue for S&P 500 companies is expected to grow just 2 percent for all of 2013, half the growth of the year before.

Economic news Friday suggested they may struggle to increase sales for a while yet.

The U.S. government that reported orders for long-lasting factory goods, excluding aircraft and military-related products, fell 1.1 percent.

Also, the University of Michigan said its index of U.S. consumer sentiment fell in October as concern grew that the partial government shutdown this month and the political fight over the nation's borrowing limit would slow growth.

Three stocks rose for every two that fell on the New York Stock Exchange.

Microsoft beat analysts' forecasts for revenue and earnings, giving hope to investors that its shift to devices and services from PC-based software will be successful. Microsoft rose $2.01, or 6 percent, to $35.73 after reporting a 17 percent increase in third quarter net income late Thursday.

Amazon.com (AMZN) was up $31.18, or 9 percent, to $363 as investors continue to shrug off its losses. The online retailer reported late Thursday that its revenue surged 24 percent to $13.8 billion in the third quarter, more than financial analysts had expected.

Zynga (ZNGA) rose 19 cents, or 5 percent, to $3.73 after the Internet gaming company reported it had cut its losses in the third quarter. The maker of "Farmville" and "Mafia Wars" is trying to appeal more to users of smartphones and tablet computers under a new CEO.

In bond trading, the yield on the 10-year Treasury note, a benchmark for mortgages and many other kinds of loans, edged down to 2.51 percent from 2.52 percent. The yield has fallen sharply since Sept. 5, when it hit 3 percent, and is the lowest it's been in three months.

What to Watch Monday:
  • The Federal Reserve releases industrial production for September, at 9:15 a.m. Eastern time.
  • The National Association of Realtors releases pending home sales index for September at 10 a.m.
The following major companies are scheduled to release quarterly earnings results:
  • Apple (AAPL)
  • Burger King Worldwide (BKW)
  • Denny's (DENN)
  • Herbalife (HLF)
  • Loews (L)
  • Masco (MAS)
  • Merck & Co. (MRK)

Increase your money and finance knowledge from home

Investor’s Toolbox

Improve your investing savvy with the right financial toolset.

View Course »

Professional Vs Do it Yourself Investing

Should you get advice or DYI?

View Course »

Add a Comment

*0 / 3000 Character Maximum

12 Comments

Filter by:
Jacob Chang

The future growth of Microsoft also depends on its new CEO that will be hired, as of now its a good investment to go for, because of the future potential Microsoft has. http://goo.gl/eAWmpJ

October 29 2013 at 6:03 PM Report abuse rate up rate down Reply
toosmart4u

President Obama is still cleaning up the mess of bush jr. The spy story started with bush jr, we all know that when he was starting all the wasteful wars.

October 26 2013 at 3:08 AM Report abuse rate up rate down Reply
toosmart4u

If you are drawing social security and medicare thank a democrat, if you want to end these two great programs vote republican. That is the way your republican politicians voted.

October 26 2013 at 3:07 AM Report abuse rate up rate down Reply
Iselin007

For every part time low wage job or no job you can expect to pay dearly for public assistance. When this human bubble pops you better have adult pampers because this is no joke.

October 25 2013 at 8:18 PM Report abuse +2 rate up rate down Reply
Iselin007

Jobs have a lot to do with the safety of your investments. When the (not in the workforce) grows faster than retirements ( you got a real problem). Since most of the job creation after outsourcing was retail and services there is little demand or income for a recovery.

October 25 2013 at 8:14 PM Report abuse rate up rate down Reply
Iselin007

It's looking like 1929 all over again. Markets up on over valued investments. Rght; 90 + million not in the labor force because their all retired. When the market crashes you'll all wonder why you weren't downloading the data from the BLS. No problem you can just move to China to avoid the reality.

October 25 2013 at 8:01 PM Report abuse rate up rate down Reply
1 reply to Iselin007's comment
merstockgto

If you were a long time invester like myself you would not be belly aching. I have invested since 1980 and the market goes up and goes down and you just hang in there and take the bumps. In the mean time I come out WAY ahead of the game.

October 26 2013 at 1:27 AM Report abuse rate up rate down Reply
elendil3136

\"...companies in the S&P 500 index are expected to grow just 4.5 percent over the same period a year ago, according to S&P Capital IQ, a research firm. At the start of the year, earnings were expected to rise at more than twice that pace.\"

How did they think that was going to happen? Job growth has been abysmal. These analysts sometimes seem to just make stuff up.

October 25 2013 at 7:29 PM Report abuse rate up rate down Reply
Hello Bob

That dag gone Obama, just messing all the markets all up. Must be "Obamacare". Couldn't possibly be investor confidence in the American economy.

October 25 2013 at 5:33 PM Report abuse +2 rate up rate down Reply
1 reply to Hello Bob's comment
americanslostagain

YOUR RIGHT ,OBAMIT NEEDS TO BE REMOVED FROM OUR WHITE HOUSE IN HANDCUFFS N DEPORTED ALONG WITH ALL ILLEGAL IMMIGRANTS THAT HE LET "BREAK" INTO AMERICA.

October 25 2013 at 6:20 PM Report abuse -1 rate up rate down Reply
2 replies to americanslostagain's comment
elendil3136

Your guys lost twice. Get over it.

October 25 2013 at 7:30 PM Report abuse +3 rate up rate down
lawmutt55

Actually, they've lost the Presidential popular vote 5 out of the last 6 times.

October 25 2013 at 9:45 PM Report abuse rate up rate down