Stocks Close at High for Year

The major market averages hit new highs for the year Friday after the Commerce Department said new-home sales rose 26.9% in March. Crude oil closes above $85. Gregg Greenberg has The Real Story.
Author:
Publish date:

NEW YORK (

TheStreet

) -- The major stock market averages finished higher Friday after struggling around the neutral line for much of the session, as investors focused on promising economic data and strong earnings news while concerns about Greece withered in the afternoon.

The

Dow Jones Industrial Average

added 70 points, or 0.6%, at 11,204. The

S&P 500

gained nearly 9 points, or 0.7%, to 1217. For both of those indices, it was their highest close since Sept. 19, 2008. The

Nasdaq

traded 11 points higher, or 0.4%, to finish at 2530, its highest finish since June 5, 2008.

For the week, the blue-chip average finished 1.7% higher. That showing was bested by both the Nasdaq and the S&P, which improved 2% and 2.1%, respectively, since last Friday's close.

Stocks initially started lower in the morning, pressured by news out of Europe.

Greece on Friday formally asked for the activation of a joint European-International Monetary Fund rescue package that will provide the debt-laden country with 30 billion euros at interest rates of about 5% from the eurozone and roughly 10 billion euros from the IMF.

But the major indices rallied, only to fall back to neutral later, after a government report showed new-home sales surged to their best monthly showing in decades.

For much of the day, the market was engaged in a tug-of-war, as investors continued to weigh a bettering economic climate on the one hand and lingering fears about Greece and financial reform on the other.

But as buying accelerated near the closing bell, Gary Flam, portfolio manager at Bel Air Investment Advisors, said the takeaway of today's action was the inherent durability investors felt about the economy.

"It's what we've seen over the last few weeks. There's this underlying strength in the market," said Flam. "But I think the second takeaway, given the news out of Greece, is these things are in the headline and are being discounted."

"Right now, everyone is very aware of what's going on with Greece. We're following the yields," he added. "The people who are citing concerns in the marketplace are citing things that are pretty well known and priced in."

Overseas, Hong Kong's Hang Seng fell 1% while Japan's Nikkei slipped 0.3%. The FTSE in London gained 1%, and the DAX in Frankfurt went ahead by 1.5%.

>>The Economy

>>Company News

>>Commodities and the Dollar

>>Treasuries

The Economy

With a key homebuyers' tax credit set to expire in a week, the Commerce Department said new-home sales surged 26.9% in March after declining by 4.1% in February. Home sales hit an annualized pace of 411,000 units last month, besting February's upwardly revised 324,000 tally. Wall Street was calling for a lighter rise to 330,000, according to consensus estimates provided by

Briefing.com

.

Homebuilder stocks moved well to the upside in the aftermath, as the Philadelphia Housing Sector index jumped 2.9%.

Separately, the Commerce Department also said durable goods orders unexpectedly fell in March, down 1.3%, after increasing 1.1% in February. Economists had been expecting growth of 0.1%.

But after excluding particularly sluggish transportation orders, overall new orders jumped 2.8% during the month, far surpassing expectations for a 0.7% increase.

A group of credit rating executives testified in front of the Senate Subcommittee on Investigations Friday, telling the panel that top-down pressure in its ranks and communications breakdowns led to the questionable awarding of safe assessments on toxic financial products,

The Associated Press

reported.

>>Overview

>>Company News

>>Commodities and the Dollar

>>Treasuries

Company News

In earnings news,

Honeywell

(HON) - Get Report

boosted its outlook for the full year while besting top- and bottom-line estimates for the first quarter, as sales in its transportation systems division jumped 33%. Shares added 28 cents, or 0.6%, to close at $47.72.

Expenses related to its buyout of

Affiliated Computer Systems

, among other items, helped push

Xerox

(XRX) - Get Report

to a loss in the first quarter. But after adjustments, the printer and business services

firm still topped earnings forecasts on a pickup in demand, which in turn helped shares hit a 52-week high during the session. Shares climbed 8.3% higher at $11.32.

Travelers

(TRV) - Get Report

said it saw

first-quarter catastrophe losses mount, describing them as "unusually significant" in a press statement, which weighed on profit and forced the insurer to report an earnings miss in the morning. Shares dipped 0.8% at $53.38.

In the energy sector,

Patriot Coal

(PCX)

posted an adjusted quarterly loss still narrower than the consensus, while describing the markets for metallurgical coal as "very robust, against a backdrop of growing global economies" in a release. Shares improved 6.3%.

Exelon

(EXC) - Get Report

said profit slipped, in part, because of lower energy gross margins. But the utilities player managed to beat earnings forecasts by 10 cents, posting $1 a share, and raised the bottom end of their full-year earnings per share range. Shares added 0.7%.

Oil servicer

Schlumberger

(SLB) - Get Report

slightly beat estimates with a first-quarter profit of 62 cents a share. In a press statement, CEO Andrew Gould said the firm continues to express optimism for 2010, highlighting that international margins have hit bottom and are looking to move up. Shares rose 6.6% to finish at $72.68.

The positive-sounding comments, coupled with rising oil prices, helped oil service stocks climb 3.2% higher, according to the Philadelphia Oil Service Sector index, making it one the winning sector on the day.

Swedish wireless-equipment maker

Ericsson

(ERIC) - Get Report

posted a 30% drop in first-quarter earnings, blaming sluggish demand from developing markets. The company missed Wall Street profit estimates. But over the next five years, the firm also added that it foresees mobile data traffic doubling annually. American depositary shares traded 9.8% higher at $12.36.

Sears

(SHLD)

said it

expects its first-quarter earnings to fall in line with forecasts, as shares gained another 8.1% Friday.

Microsoft

(MSFT) - Get Report

disappointed market participants late Thursday, making it the Dow's chief laggard today, despite posting an earnings beat on a 28% jump in Windows sales. Shares dipped 1.3% at $30.99.

Around the same time,

Amazon.com

(AMZN) - Get Report

reported a 46% rise in first-quarter sales, doing little to help shares that fell 4.3% Friday.

Dow component

American Express

(AXP) - Get Report

said late Thursday that surging card member spending helped propel earnings past expectations. Consequently, its stock was one of the leading advancers on the blue-chip average, adding 2.7% Friday.

Capital One Financial

(COF) - Get Report

saw

loan losses drop abruptly in the same period, which gave shares a 2.6% lift Friday.

Merck

(MRK) - Get Report

will take a $150 million charge in the first quarter, the company said in a release, because of new health care reform legislation. Still, shares picked up, adding 5% at $35.46, as the effects appeared acceptable compared to other drug manufacturers.

Commodities and the Dollar

The June delivery crude oil contract settled $1.42 higher, at $85.12 a barrel, prompted in part by the soaring new home sales numbers.

Elsewhere in commodity markets, the June gold contract traded $10.80 higher to settle at $1,153.70 an ounce.

The dollar was trading lower against a basket of currencies, with the

dollar index down by nearly 0.2%.

>>Overview

>>The Economy

>>Company News

>>Treasuries

Treasuries

The benchmark 10-year Treasury weakened 13/32, lifting the yield to 3.819%.

The two-year note slipped 2/32, strengthening the yield to 1.070%. The 30-year bond fell 16/32, raising the yield to 4.669%.

--Written by Sung Moss and Melinda Peer in New York

.

>>Overview

>>The Economy

>>Company News

>>Commodities and the Dollar