Microsoft Sends Tech Soaring

Updated from 4:04 p.m. EDT

An earnings beat by Microsoft (MSFT Quote) and the promise of a fourth-quarter profit from Countrywide (CFC Quote) lifted traders' spirits Friday, even as crude continued its record-breaking journey.

The Dow Jones Industrial Average closed at its best level of the session, rising 134.78 points, or 0.99%, at 13,806.70, and the S&P 500 improved by 20.88 points, or 1.38%, to 1535.28. The Nasdaq Composite was sharply higher, up 53.33 points, or 1.94%, at 2804.19.

Leading tech to the upside was Microsoft, who jumped 9.5% to $35.03. Late Thursday, the software giant easily beat estimates with its fiscal first-quarter earnings and revenue. Microsoft also guided higher for its fiscal second quarter and the full year.

Meanwhile, Countrywide lost more than $1 billion in the latest quarter, but the stock soared 32.4% to end at $17.30 after the lender kept its quarterly dividend and said it should return to profitability in the fourth quarter and next year.

Also among financials, Merrill Lynch (MER Quote) rallied as rumors swirled that CEO Stan O'Neal will be forced out by early next week. The stock, which tumbled just days ago after the brokerage reported a mammoth third-quarter writedown, climbed $5.19, or 8.5%, to $66.09.

"The two keys to today were Microsoft and the renaissance of the financial stocks," said Larry Wachtel, senior market analyst with Wachovia Securities. "The key movers were all in the financials, and these beleaguered names helped us rally today."