Stocks Tear It Up
Updated from 4:08 p.m. EDT
Wall Street surged Friday as a string of upbeat quarterly results convinced droves of investors to bulk up on U.S. equities.
The
Dow Jones Industrial Average
was off its peak for the day but still soared 228.87 points, or 1.81%, to 12,849.36. The
S&P 500
jumped 24.77 points, or 1.81%, to 1390.33, and the
Nasdaq Composite
climbed 61.14 points, or 2.61%, to 2402.97.
Breadth was strongly positive to end the week. Roughly 2.09 billion shares changed hands on the
New York Stock Exchange
, with advancers crushing decliners by a 4-to-1 margin. Volume reached about 2.21 billion on the Nasdaq as winners beat losers 7 to 3.
James Park, managing director with Rodman & Renshaw, pointed to the powerful effect that these solid earnings -- and, more importantly, guidance -- have been imbuing on equity measures. "I think that's shaking out a lot of the shorts, and that there are a lot more fundamental buys going on," he said. "I think there are a lot of guys putting their cash to work."
Phillip Roth, chief technical market strategist with Miller Tabak, noted that the major averages are all closing in on their February highs, the top end of the trading range in which the market has been hemmed for most of this year.
"I don't think it's a big breakout," he added. "I think the market may futz around next week, but eventually it will go higher again. Because it looks like people have absorbed the bad news, fundamentally, and the market has also gone through resistance areas."
Given all that, Roth believes today's action should mark a step forward in a recovery that he says began in January.
Robert Pavlik, chief investment officer with Oaktree Asset Management, voiced similar predictions for next week's action. "If we see some selling early next week, that will not be all that unusual, especially after such a strong week like what we've had," he said.
The Dow and the S&P have both surged 4.3% since Monday, and the Nasdaq has catapulted by 4.9%, driven largely by rallies Wednesday and Friday.
With that, the Dow's losses for the year have now pared back to 3.1%, though the S&P is still registering a 5.3% loss since the beginning of January. The Nasdaq has sunk 9.4% so far in 2008.
As for longer-term trends, Pavlik believes that if the market can hold above the February resistance -- specifically, if the Dow and the S&P can break and stay above 12,900 and 1420, respectively -- "we'll have broken out above the long-term downtrends which were started back on October 9th."
One of the key drivers behind Friday's upward action was
(GOOG) - Get Report
, which said its first-quarter profit rose 31% from the prior year to $1.31 billion, or $4.12 a share,
on an adjusted basis. Revenue was also better than expected.
Google's stock, which has taken a pounding in recent months amid reports of declining paid-click numbers and an earnings miss last quarter, bolted past the $500 mark for the first time since February. Shares were up $89.87, or 20%, to $539.41.
Also bolstering buying sentiment was Dow component
Citigroup
(C) - Get Report
. The banking behemoth missed the average analyst target with a loss of $5.1 billion, or $1.02 a share, as $6 billion in pretax writedowns and subprime credit costs ate into its bottom line.
Still, that was
than the gargantuan writeoffs that some analysts were expecting, and shares bounced 4.5%.
Bulldozer maker
Caterpillar
(CAT) - Get Report
, another member of the Dow, gained 8.5% after saying its its
first-quarter earnings ramped up
13% to $922 million, or $1.45 a share, on better-than-expected revenue.
Honeywell
(HON) - Get Report
was also contributing to the rally, saying quarterly sales grew 11% year over year, prompting the aerospace-equipment company to
raise its full-year forecast
.
Schlumberger
(SLB) - Get Report
, an oilfield-services firm, offered a bullish outlook in a conference call even as rising earnings fell short of consensus.
Honeywell rose 6.3%, and Schlumberger added 6.9%.
One of the day's biggest price jumps, meanwhile, came from staffing firm
Manpower
(MAN) - Get Report
, which achieved an easy earnings beat as favorable currency-exchange rates helped to push income higher by 27%. Shares were up 12%.
Xerox's
(XRX) - Get Report
adjusted profit, which excludes heavy one-off litigation costs, was in line with expectations. Shares ticked up 0.5%.
As for financial-space results, joining Citi in the green were online broker
E*Trade
(ETFC) - Get Report
and regional bank
Zions
(ZION) - Get Report
.
E*Trade
in the first quarter, but shares ratcheted up 9.7% as it also cited a growing customer base and detailed the progress of its reorganization plan. Zions saw a big profit drop that was just off the consensus estimate, but the stock still moved up 6.4%.
Capital One
(COF) - Get Report
shares were under pressure, however, after saying its outlook had "significantly deteriorated due to weakness in U.S. economy," even though the credit-card company also edged ahead of analyst projections with a
slipping profit
of $1.47 a share. The stock was cut to negative ratings at both Piper Jaffray and Keefe Bruyette, and Friedman Billings shaved down its price target. Shares fell 3.1%.
Back in the tech space,
Advanced Micro Devices
(AMD) - Get Report
shares also turned in a lackluster performance after the chipmaker
posted a loss
of $358 million, or 59 cents a share, even though that was in line with analysts' subdued targets and sharply narrowed from a year earlier. Shares shed 1.3% at $6.11.
Fellow semiconductor concern
SanDisk
(SNDK)
but beat on revenue, and shares rose 5.8%.
Away from earnings,
AT&T
(T) - Get Report
disclosed that it's firing 1.5% of its workforce, or about 4,650 employees, primarily from management positions. The company added that it will take a related charge of $374 million, and that the actual headcount should remain "stable" this year as it hires other employees in order to "support growth areas." Shares were down marginally at $37.51.
Crude oil had its fifth straight record-breaking day, hitting a new high of $116.93 before retreating to a gain of $1.83 at $115.62, a closing record.
Gold futures, however, slid $27.70 to $915.20 an ounce, spurring a selloff in the gold-mining sector.
Agnico-Eagle Mines
(AEM) - Get Report
,
Barrick Gold
(ABX)
,
Goldcorp
(GG)
,
Newmont Mining
(NEM) - Get Report
and
Kinross Gold
(KGC) - Get Report
were all losing between 1.7% and 4.8%.
At the same time, the U.S. dollar was healing some of its wounds. The greenback firmed by 0.5% against the euro to $1.5807 and was fetching 103.68 yen, a 1.2% climb from the prior settlement.
Markets abroad were mostly higher. The Hang Seng Index in Hong Kong lost 0.3% overnight, but the Nikkei 225 in Tokyo rose 0.6%. Among European exchanges, the FTSE 100 in London was up 1.3%, and Germany's Xetra Dax surged 2.4%. The Paris Cac tacked on 2.1%.