Earnings gains drive stocks higher
NEW YORK - Earnings gains at major companies and encouraging economic news pushed stocks to record levels Thursday. A drop in claims for unemployment benefits signaled a healthier economy and encouraged investors to buy stocks. The Federal Reserve Bank of Philadelphia said manufacturing in its region grew this month at the fastest pace in more than two years.
NEW YORK - Earnings gains at major companies and encouraging economic news pushed stocks to record levels Thursday.
A drop in claims for unemployment benefits signaled a healthier economy and encouraged investors to buy stocks. The Federal Reserve Bank of Philadelphia said manufacturing in its region grew this month at the fastest pace in more than two years.
Among companies reporting second-quarter earnings, Morgan Stanley was one of the standouts, rising $1.16, or 4.4 percent, to $27.70. The New York bank reported sharply higher earnings driven by investment banking gains and said it planned to spend $500 million buying back its own stock. International Business Machines rose $3.44, or 1.8 percent, to $197.99 after its profit beat analysts' forecasts as software sales grew.
Energy companies rose after the price of oil shot to a 16-month high on signs that the economy is improving.
The Dow Jones industrial average rose 78.02 points, or 0.5 percent, to 15,548.54. The Standard & Poor's 500 index climbed 8.46 points, or 0.5 percent, to 1,689.37. The index has gained for 10 of the last 11 days. The Nasdaq composite edged up 1.28 points, just 0.04 percent, to 3,611.28.
The Federal Reserve's $85 billion of monthly bond purchases, intended to hold down long-term interest rates, has been a major factor supporting the rally in stocks. Fed Chairman Ben Bernanke told the House Financial Services Committee on Wednesday that there was no "preset course" for ending the stimulus and that any change would depend on how well the economy is doing.
Investors have worried that the central bank might reduce its stimulus before the economy was strong enough. Bernanke repeated the comments to the Senate Banking Committee on Thursday.
The Dow's gains were led by IBM and UnitedHealth Group, which reported better earnings than analysts were expecting.
The Nasdaq was held back by weak earnings reports from several major technology companies.
EBay fell $3.86, or 6.7 percent, to $53.52 after CEO John Donahoe said late Wednesday that economic weakness in Europe and South Korea will "continue to be a challenge" in the second half of the year.
Intel fell 91 cents, or 3.8 percent, to $23.24 after the world's largest maker of computer chips predicted flat sales amid a decline in PC sales. The company's earnings and revenue fell in the second quarter.
In government bond trading, the yield on the 10-year note edged up to 2.54 percent from 2.49 percent late Wednesday.
In commodities trading, the price of oil rose $1.56, or 1.5 percent, to $108.04 a barrel. The price of gold gained $6.70, or 0.5 percent, to $1,284.20 an ounce.
The dollar rose against the euro and the Japanese yen.