Closing Bell: Upbeat Earnings, Economic News Push Stocks to New Records

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Ben Bernanke
AP
Earnings gains at major U.S. companies and encouraging economic news pushed stocks to record levels Thursday.

The Dow Jones industrial average (^DJI) rose 78 points, or 0.5 percent, to 15,547, while the Standard & Poor's 500 (^GPSC) index climbed 8.5 points, or 0.5 percent, to 1,689. The Nasdaq composite (^IXIC) added 1.3 points, or 0.04 percent, to 3,611.

A drop in weekly claims for unemployment benefits signaled a healthier economy and persuaded investors to buy stocks. Separately, the Federal Reserve Bank of Philadelphia said manufacturing activity in the mid-Atlantic region grew in July at the fastest pace in more than two years.

Among companies reporting second-quarter earnings, Morgan Stanley (MS) was a standout, rising $1.16, or 4.4 percent, to $27.70. The New York-based bank reported sharply higher earnings driven by investment banking gains. IBM rose $3.44, or 1.8 percent, to $197.99 after its profit beat analyst forecasts as software sales grew.

Investors also kept an eye out for comments from Fed chairman Ben Bernanke, who appeared before the Senate Banking Committee. Bernanke said that Congress could do more to help the U.S. economy this year but has instead focused on reducing the federal deficit.

In his second appearance before lawmakers this week, Bernanke told senators that the Fed's low interest-rate policies have carried "an awful lot of the burden" of driving economic growth.

Bernanke gave stocks a lift Wednesday when he said that there was no "preset course" for ending the Fed's $85 billion-a-month bond-buying program, and that any change would depend on how well the economy is doing. Investors have worried that the central bank might reduce its stimulus before the economy was strong enough.

In commodities trading, the price of oil rose $1.56, or 1.5 percent, to $108.04 a barrel. The price of gold gained $6.70, or 0.5 percent, to $1,284.20 an ounce.

Mortgage-buyer Freddie Mac said the average on the 30-year loan slipped to 4.37 percent. That's down from 4.51 percent last week but is still near the highest level in nearly two years.

The Conference Board's index of leading indicators remained at 95.3 in June. The flat reading followed increases of 0.2 percent in May and 0.8 percent in April. The longer-term trend has been positive: the index increased 1.7 percent in the first six months of this year. That's better than the 1.1 percent rise in the previous six months.

Dell (DELL) delayed its planned vote on founder Michael Dell's plan to take the slumping computer maker private. The formal shareholder vote was rescheduled for July 24. The delay suggests the the board needs more time to rally support, and is a significant setback for Michael Dell and the company's board, which has spent the past five months trying to persuade shareholders to approve the buyout proposal. Dell's stock rose 24 cents, or 1.9 percent, to $13.12.

Among other stocks in the news:
  • EBay (EBAY) fell $3.86, or 6.7 percent, to $53.52 after its CEO John Donahoe said late Wednesday that economic weakness in Europe and Korea will "continue to be a challenge" in the second half of the year.
  • Intel (INTC) fell 91 cents, or 3.8 percent, to $23.24 after the world's largest maker of computer chips predicted flat sales amid a decline in PC sales. The company's earnings and revenue fell in the second quarter.
  • Men's Wearhouse (MW) is buying the Joseph Abboud brand for about $97.5 million in cash in a deal that will broaden the company's roster of exclusive brands. The news follows the retailer's decision to fire its founder George Zimmer as executive chairman last month. The stock rose 20 cents, or 0.5 percent, to $39.15.
  • Profit at grocery store chain Safeway (SWY) fell in the second quarter, but adjusted results topped Wall Street expectations. The stock rose 1.67, or 6.8 percent, to $26.32.
  • UnitedHealth Group (UNH), the nation's largest health insurer, surged $4.32, or 6.5 percent, to $70.55 after reporting earnings that beat analyst estimates.
  • Johnson Controls (JCI), which makes heating and ventilation systems for buildings, surged $3.09, or 8.3 percent, to $40.43 after the company said its fiscal third-quarter net income climbed 33 percent as revenue improved. The earnings beat Wall Street expectations, and the company provided a fourth-quarter earnings forecast above analyst estimates.
What to watch Friday:

These major companies are scheduled to report quarterly financial results:
  • General Electric Co. (GE)
  • Honeywell International Inc. (HON)
  • ManpowerGroup (MAN)
  • Whirlpool Corp. (WHR)
-Compiled from staff and wire reports.


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11 Comments

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humbl14u

This is the economy that GW gave away. Get some while you can. The ultra rich are letting you have some crumbs but they will get greedy again and cash out, even though they have more money than they will ever need. Remember '2000' when the young techies were getting a leg up? The blue chip boys didn't like that very much.

July 21 2013 at 11:00 PM Report abuse rate up rate down Reply
bheckel169

Upbeat economic news huh? Detroit files bankruptcy, housing starts lowest in years, 7.6 percent unemployment with minorities even higher. Employers reducing employee hours to avoid Obamacare penalities. Yeh, that's why the stock market is doing so well. How about because they're playing russian roulette and hoping the only place where they can get a decent return on their money won't explode in their face?

July 19 2013 at 4:14 PM Report abuse -1 rate up rate down Reply
Iselin007

If they get tired of using Q's they can use up some of the other letters in the Alphabet. The letter F would be a wise choice about now.

July 18 2013 at 11:00 PM Report abuse -1 rate up rate down Reply
Iselin007

Based on the real economy this Q deal will be around until your grand kids become grandfathers.

July 18 2013 at 10:56 PM Report abuse rate up rate down Reply
robtucan

Wow! What a strange site. Are these people real? I guess we have to blame our education system.

July 18 2013 at 8:24 PM Report abuse -1 rate up rate down Reply
hsstempe

common sense - SELL NOW!

July 18 2013 at 7:23 PM Report abuse rate up rate down Reply
sniphair

I love it Helicopter Ben lies through his teeth, & the American people swallow it. It won't be long before you see Inflation become uncontrolable. Thats when the average American, will say enough is enough. Sadly enpugh it's not very far way.

July 18 2013 at 6:09 PM Report abuse -2 rate up rate down Reply
rlynn2578

The market rises when unemployement figures miss estimates because investors think the FED will continue QE longer or even increase QE, and then it rises some more when unemployment figures are better than expected. It just doesn't add up. This phenomenon could be called the FED QE bubble driven by the ones who benefit the most from the FED poliicies; Wall Street and the big banks. However, all bubbles eventually burst. Unfortunately, the average worker with a 401K as its only retirement, other than social security, will likely end up paying this bill too when the big boys sell to start the next crash.

July 18 2013 at 5:16 PM Report abuse -2 rate up rate down Reply
1 reply to rlynn2578's comment
Hello Bob

The answer should lie between your ears. However, in your case the space is empty, you don't know what you are talking about. You didn't know yesterday or the day before. Hint: Stop and take a deep breath, study hard and then use all the common sense that you can possibly muster and you will eventually come up with the correct and true answer.

July 18 2013 at 6:00 PM Report abuse +4 rate up rate down Reply
fineblackgent1

Happy days are here again...thank you,president Obama!!!

July 18 2013 at 5:15 PM Report abuse +4 rate up rate down Reply
1 reply to fineblackgent1's comment
rlynn2578

Do you really don't think happy days are here again? There is just a tremenduous disconnect between Main Street and Wall Street. Just today, Detroit filed for Bankruptcy. In the process, they were trying to get the public service workers to accept less than ten cents on the dollar for the retirement benefits they had earned. Everyone wants to solve the problem at the expense of those who can not affrd to carry the burden. At the end of the day, both political parties don't look out for the average worker. One party tries to protect the poor with money from the affluent, but doesn't do much for the middle class even though they claim they do. The other party will frankly tell the poor and middle class that they are looking out for the affluent only, but they will pretend that some benefits will trickle down to the middle class. It is all a house of cards. When the average worker can no longer support the economy because of the disparities, the house of cards will come crashing down.

July 18 2013 at 5:44 PM Report abuse -2 rate up rate down Reply