Tech stocks rise ahead of Google, IBM reports
NEW YORK -- Investors are pushing Wall Street's rally forward, just at a slower pace.
Stocks continued the week's sprint-and-jog play, carving more modest gains Thursday after surging the day before on a strong forecast from chip maker Intel Corp. Analysts said the market's smaller moves were to be expected after the Dow Jones industrial average surged 470 points, or 5.9 percent, in only three days.
Technology stocks advanced for the seventh straight day ahead of profit reports from Internet search company Google Inc. and computer maker International Business Machines Corp. They are set to report after the market close. Investors are eager to hear their assesments of where the economy is headed.
Dan Deming, a trader with Strutland Equities in Chicago, said tech stocks are rising because investors are afraid they will miss out if Google and IBM turn in good reports.
"It's kind of feeding on itself because you're seeing these earnings come in from the tech sector, particularly, showing pretty good numbers," he said.
The jump in stocks this week halted a monthlong slide that came as investors worried that a huge rally in March and April on hopes for an economic recovery had gone too far. This week's earnings reports have given investors some of the confirmation that the economy isn't as bad as feared, but they still want to see more evidence of a turnaround.
In late afternoon trading, the Dow rose 74.60, or 0.9 percent, to 8,690.81. The Standard & Poor's 500 index rose 6.47, or 0.7 percent, to 939.15, while the tech-heavy Nasdaq composite index rose 16.66, or 0.9 percent, to 1,879.56.
Meanwhile, bond prices jumped. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.55 percent from 3.62 percent late Wednesday.
Investors looked past a stronger profit report from JPMorgan Chase & Co., which reported big gains in its investment banking business, held back somewhat by loan losses.
"A lot of the good news has been priced in and the market really needs to see more evidence that there is strong momentum in the financials," said Nick Kalivas, vice president of financial research at MF Global.
Financial stocks lagged the rest of the market after small-business lender CIT Group Inc. said negotiations with federal regulators about a rescue broke off. Investors are worried the company could file for bankruptcy protection. CIT tumbled $1.23, or 75 percent, to 41 cents.
JPMorgan said it generated record revenue, spurred on by strong investment banking operations. Its results come two days after Goldman Sachs Group Inc. also topped expectations with much stronger results in underwriting and trading. JPMorgan slipped 8 cents to $36.20.
Strong earnings from the banks have encouraged investors about the economy. The results also show that many of the nation's biggest banks have quickly recovered from the collapse of credit markets last fall that led to the failure of Lehman Brothers and near collapse of American International Group Inc.
Ahead of their reports, Google rose $5.69, or 1.3 percent, to $443.86, while IBM rose $3.28, or 3.1 percent, to $110.50.
In economic news, the Labor Department said new claims for unemployment insurance plunged last week by 47,000 to 522,000, the lowest level since early January. Economists polled by Thomson Reuters predicted an increase to 575,000. The improved data, however, might have been affected by the timing of automobile plant shutdowns.
The dollar fell against other currencies. Gold prices fell.
Benchmark crude rose 48 cents to settle at $62.02 a barrel on the New York Mercantile Exchange.
About two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 785.2 million shares, compared with 825. 6 million shares traded at the same point Wednesday.
The Russell 2000 index of smaller companies rose 4.91, or 1 percent, to 520.55.
Overseas, Britain's FTSE 100 rose 0.4 percent, Germany's DAX index rose 0.6 percent, and France's CAC-40 gained 0.9 percent. Japan's Nikkei stock average rose 0.8 percent.