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Stocks Continue to Climb as Companies Exceed Expectations

NEW YORK ( TheStreet) -- Major U.S. stock averages rose Friday, with all three key indices ending the week higher, as Procter & Gamble (PG - Get Report) shares popped after an upbeat earnings forecast. AT&T (T) also advanced after the company posted a narrower quarterly loss.

Microsoft (MSFT) shares posted a modest rebound after initially slumping following its earnings announcement.

Investing sentiment was helped as business confidence in Germany improved for a third month in January, according to the Ifo think tank's business climate index, which jumped to 104.2 from 102.4 in December.

In addition, the European Central Bank said Friday that 278 banks in the eurozone indicated they will repay, early, €137.2 billion in three-year loans, issued a little over a year ago.

The amount was larger than expected and pointed to easing financial conditions in the region. As Marty Mitchell, a head trader at Stifel Nicolaus said, suggested: "More stability in Europe and the potential for an improved risk appetite in markets."

The Dow Jones Industrial Average rose 71 points, or 0.5%, to 13,896. The blue-chip index gained 1.8% for the week.

Breadth was positive in the Dow as winners outpaced losers 23 to seven. Top percentage blue-chip gainers included Procter & Gamble, JPMorgan (JPM), Johnson & Johnson (JNJ), General Electric (GE) and Merck (MRK).

Procter & Gamble shares gained 3.9% after the company on Friday said it increased its core earnings per share guidance for the year to $3.97 to $4.07 amid "strong productivity improvement and resulting cost savings." The company also increased its outlook for share repurchases to $5 billion to $6 billion.

P&G recorded fiscal second-quarter earnings of $1.22 a share on revenue of $22.2 billion, topping the average analyst estimate of $1.11 a share on revenue of $21.91 billion.

Microsoft received a boost in its fiscal second quarter from its server & tools division and Windows 8 licenses, helping it post earnings that topped Wall Street expectations. Overall results were mixed, however, causing the stock to fall after the release Thursday evening. Shares recovered ground Friday, up 0.9%.

AT&T posted a narrower loss in the fourth quarter as Apple's iPhone helped generate record smartphone sales. Shares added 0.8%.

Cisco reached an agreement to sell its home-networking business unit, including the Linksys router brand, to privately held Belkin, a maker of smartphone cases and computing accessories. A purchase price for the deal, expected to close in March, wasn't disclosed. Cisco shares were up 0.6%.

3M, Home Depot, P&G as well as Johnson & Johnson (JNJ) and United Technologies (UTX) all reached multi-year highs Friday.

Caterpillar (CAT), UnitedHealth (UNH), Boeing (BA) and Wal-Mart (WMT) traded lower.

Boeing shares were down 0.4% as safety investigations into the company's Dreamliner continue.

The S&P 500 was up 8 points, or 0.5%, to 1,503. The index ended up 1.1% for the four-day trading week. The Nasdaq was up 19 points, or 0.6%, to 3,150. The tech-heavy index added 0.5% on the week.

Most sectors were trading higher in the broader market. Top gainers included conglomerates, consumer cyclicals and non-cyclicals. Technology shares were also edging higher. The basic materials was the lone sector in the red.

Earlier on Friday, the S&P 500 once again crossed the 1,500 level. On Thursday, the S&P 500 managed to breach that mark a number of times during the day. Doreen Mogavero, founder of Mogavero Lee & Co., said "1,500 was the target and [traders] wanted to see if we could get there this year and we'd gotten there earlier in the year. I don't think you can question the momentum of this market."

Mogavero said there have been two camps, both polarized, on theories of where the market is headed from current levels. Some traders have been feeling that the market is poised to really take off for a "huge new secular bull market" and others say a pullback is due.

December new-home sales figures were the only U.S. data released Friday. The Census Bureau said new-home sales fell to a seasonally adjusted annual rate of 369,000 in December from an upwardly revised 398,000 in November. Economists, on average, were expecting December new-home sales of 385,000.

"New-home sales are volatile, revision prone, and one of the less well-measured government series," said John Ryding and Conrad DeQuadros, the founders of research firm RDQ Economics. "Although the decline (from the significantly upwardly revised November reading) comes as a disappointment, it does little to change the picture of a housing recovery."

Gold for February delivery fell $13.30 to settle at $1,656.60 an ounce at the Comex division of the New York Mercantile Exchange, while March crude oil futures shed 7 cents to close at $95.88 a barrel.

The benchmark 10-year Treasury slumped 26/32 to raise the yield to 1.949%. The dollar was dipping by 0.29%, according to the U.S. dollar index.

In corporate news, E*Trade Financial (ETFC) shares climbed 0.6% after the company reported a wider-than-expected quarterly loss and a disappointing revenue as daily average revenue trades declined.

Starbucks (SBUX - Get Report), the coffee chain, said Thursday that fiscal first-quarter profit rose 13% and global same-store sales in the quarter climbed 6%. Shares popped 4.1%.

Select Comfort (SCSS) shares plunged 18% after the bed manufacturer and retailer posted earnings that missed estimates.

Select Comfort rival Tempur-Pedic ( TPX ) beat fourth-quarter revenue and earnings expectations despite seeing profit decline by 58% amid softer mattress sales and margins. Shares surged 6.4%.

Halliburton ( HAL) shares added 5.1% after the oil-services company posted stronger-than-forecast fourth-quarter results. The company said it predicts that in 2013, North America rig counts will improve from the fourth quarter but be down slightly compared to 2012.

Threshold Pharmaceuticals (THLD - Get Report) shares closed up 1.2%, after having jumped more than 10% during the session following the biotechnology company's announcement that it was receiving a $30 million milestone payment from Merck.

KLA-Tencor ( KLAC ) shares surged 8.4% after the semiconductor-equipment company booked better-than-expected quarterly results.

-- Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.

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HAL $40.44 -3.83%
KLAC $69.63 -0.63%
PG $81.10 0.16%
SBUX $56.25 -1.59%
THLD $0.42 -3.64%


Chart of I:DJI
DOW 17,750.91 -140.25 -0.78%
S&P 500 2,063.37 -18.06 -0.87%
NASDAQ 4,763.2240 -54.37 -1.13%

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