Stocks Push Higher Despite Gloomy Data

NEW YORK (TheStreet) -- The major U.S. equity averages finished with mild gains Thursday up as an IBM (IBM)-led rally in technology offset a weak batch of economic data.

The Dow Jones Industrial Average added nearly 35 points, or 0.27%, to close at 12,943. The blue-chip index, which has risen in four of the past five sessions, is now up 5.9% year-to-date.

IBM was the standout performer with a gain of nearly 4% to $195.34 after Big Blue eased past Wall Street's expectations for its latest quarter and lifted its earnings outlook. Because the Dow is price-weighted and IBM has the highest per share price in the index, the impact of its advance was considerable.

Other blue-chip winners included Boeing ( BA), Chevron ( CVX) and United Technologies ( UTX).

American Express ( AXP) was one of the Dow's biggest decliners, losing 3.5%, after the credit card company came in short of Wall Street's revenue expectations in its second quarter. Other blue chips in decline included AT&T ( T), Bank of America ( BAC), Verizon ( VZ), which also reported its quarterly numbers, and Wal-Mart Stores ( WMT).

The S&P 500 tacked on 4 points, or 0.27%, to settle at 1376.51, while the Nasdaq added more than 23 points, or 0.79%, at 2966.

Aside from technology, basic materials and consumer cyclicals were the strongest sectors in the broad market. Financials were weak.

The earnings headlines from tech heavyweights kept coming after Thursday's closing bell as both Google ( GOOG) and Microsoft ( MSFT) topped Wall Street's profit expectations with their quarterly reports but came in light on revenue.

Google reported non-GAAP earnings of $3.35 billion, or $10.12 a share, on revenue excluding traffic acquisition costs of $8.36 billion for the second quarter vs. the average analysts' estimate for a profit of $10.04 a share on revenue of $8.41 billion.

Thanks to strength in its server and tools business, Microsoft posted a non-GAAP profit of $6.93 billion, or 73 cents a share, for its fiscal fourth quarter. Revenue totaled $18.06 billion. The consensus was for earnings of 62 cents a share on revenue of $18.13 billion.

In other corporate news, Shares of Qualcomm ( QCOM) jumped 4.26% to $58.44 following its third-quarter report despite an earnings miss and lowered fourth-quarter guidance. The weaker outlook was attributed to a supply shortage rather than problems with customer demand, which the company said is robust.

After suffering through a botched initial public offering of Facebook ( FB) and a two-notch ratings downgrade, Morgan Stanley ( MS) reported a big earnings miss as revenue and earnings per share fell short of expectations. Shares fell 5.29% to $13.25.

eBay ( EBAY) on Wednesday reported quarterly earnings of 56 cents a share on revenue of $3.39 billion. Analysts were looking for profit of 55 cents a share on revenue of $3.41 billion. The online auctioneer saw huge growth in at its PayPal division, which saw revenue rise 26% year over year. Shares surged up 8.63% to $43.95.

The FTSE in London settled up 0.5% and the DAX in Germany closed ahead by 1.11% amid the cheer spread by consensus-topping corporate earnings reports and as the German Parliament approved a rescue package for Spain's deeply troubled banks by a large majority. The package is valued at up to €100 billion ($122 billion).

September crude oil futures rose $2.80 to settle at $92.97 a barrel, booking a seventh straight day of gains. August gold futures surged $9.60 to settle at $1,580.40 an ounce.

The benchmark 10-year Treasury was down 5/32, lifting the yield to 1.517%, while the greenback was off 0.12%, according to the dollar index.

The U.S. economic calendar on Thursday included weekly initial jobless claims, existing home sales, the Philadelphia Federal Reserve Bank's business outlook survey and the Conference Board's index of leading economic indicators.

The Labor Department said that initial jobless claims for the week ended July 14 rose 34,000 to 386,000 from the week before upwardly revised 352,000, amid payback from the previous week's favorable seasonal factors. Economists polled by Thomson Reuters expected that claims would rise to 365,000.

"The rebound in the latest weekly data is causing debate over whether seasonal adjustments are boosting or offsetting the weekly data," said Andrew Wilkinson, chief economic strategist at Miller Tabak. "And while it is hard to conclude a clear view at this point, it is hard to judge whether the picture is better or worse although the weight of other anecdotal evidence surrounding the labor market tells us things are slightly worse."

The four-week moving average of claims declined by 1,500 to 375,500.

Continuing claims for the week ended July 7 rose by 1,000 to 3.314 million.

The Conference Board's leading economic indicators index for the U.S. declined 0.3% in June to 95.6, following a slightly upwardly-revised 0.4% increase in May. Economists on average expected a smaller decline of 0.1% in June.

"The U.S. LEI declined in two of the last six months, and its six-month growth rate has eased in the last three months," said Ataman Ozyildirim, economist at The Conference Board. "The strengths among the leading indicators have become less widespread as consumer expectations and manufacturing new orders offset gains in the financial, labor, and construction-related components."

Simultaneously, the Philly Fed reported that its business outlook survey's broadest measure of manufacturing conditions, the diffusion index of current activity, improved to minus 12.9 in July from minus 16.6 in June, but marked the third straight negative reading for the index. Economists thought the index would improve to minus 8 in July.

Also, the National Association of Realtors reported that existing home sales declined 5.4% to a seasonally adjusted annual rate of 4.37 million in June from an upwardly revised 4.62 million in May, but are 4.5% higher than the 4.18 million-unit level in June 2011. Economists, on average, predicted that existing home sales rose to a 4.63 million an annual rate in June.

-- Written by Andrea Tse and Alexandra Zendrian in New York.

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

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