Dow Hits Record amid Tech Profits
Stocks finished broadly higher Wednesday, as the Dow hit a new all-time closing high amid strong earnings news from the recently beleaguered tech sector. An afternoon rebound in oil prices boosted energy shares. Markets were showing little reaction to Tuesday night’s State of the Union address, says http://outlook.standardandpoors.com.
On Wednesday, the Dow Jones industrial average rose 87.89 points, or 0.7%, to 12,621.69, a new closing record. The broader Standard & Poor’s 500 index added 12.14 points, or 0.85%, to 1,440.13. The tech-heavy Nasdaq composite climbed 34.87 points, or 1.43%, to 2,466.28, its biggest gain since Dec. 4.
NYSE breadth was decidedly positive, with 20 issues advancing for every 10 declining. Nasdaq breadth was 20-10 positive.
Strength in tech stocks and large-cap names may determine whether the market can continue to advance, some analysts say. “[The] key to the market’s near term direction is likely in the ability of Nasdaq and the big cap stocks to regain a leadership function,” says Richard Dickson, senior market strategist at Lowry’s Reports. “Renewed buying interest could lead to a further rally and likely new rally highs in the [Dow], S&P, and Nasdaq.”
Among Wednesday’s stocks in the news, Yahoo! (http://www.businessweek.com/ticker/) was solidly higher after the Internet search company announced an early launch of its “Project Panama” upgrade and reported fourth-quarter earnings that topped analyst estimates.
Sun Microsystems (http://www.businessweek.com/ticker/) was sharply higher after the server and software maker said it turned a quarterly profit for the first time following years of losses. UBS raised its price estimate for the stock by 18% to $8.25.
AT&T (http://www.businessweek.com/ticker/) helped buoy the Dow after its Cingular Wireless unit posted strong quarterly profits.
On the downside, Advanced Micro Devices (http://www.businessweek.com/ticker/) was sharply lower as the chipmaker posted a fourth-quarter loss amid an ongoing price war with Intel (http://www.businessweek.com/ticker/).
Dow component McDonald’s (http://www.businessweek.com/ticker/) reported a sharp rise in fourth-quarter earnings, including one-time gains from last year’s spinoff of Chipotle Mexican Grill (http://www.businessweek.com/ticker/), but shares of the fast-food giant fell.
Oil producer ConocoPhillips (http://www.businessweek.com/ticker/) was higher after the company posted a 13% drop in fourth-quarter earnings.
Corning (http://www.businessweek.com/ticker/) was up more than 10% after the tech company said it swung to a profit in the fourth quarter.
Shares of Hershey (http://www.businessweek.com/ticker/) dipped after the chocolate and candy maker logged a 10% lower fourth-quarter profit.
Abbott Laboratories (http://www.businessweek.com/ticker/) was modestly higher after the health-care products maker said it swung to a fourth-quarter loss.
Companies set to announce quarterly results Thursday include AT&T. The telecom company is expected to report earnings of 59 cents per share on $20.9 billion in revenues.
On the M&A front, Dominion Resources (http://www.businessweek.com/ticker/) was higher amid reports Goldman Sachs (http://www.businessweek.com/ticker/) and Morgan Stanley (http://www.businessweek.com/ticker/) may collaborate on a bid for the utility company’s oil and gas assets.
Oil prices built on Tuesday’s hefty gains during a volatile session, reportedly boosted by investment fund buying. In the energy markets, March West Texas Intermediate crude oil futures rose 33 cents to $55.37 a barrel, as concerns about cold weather and OPEC production cuts offset a weekly inventory report showing a rise in supplies.
Investors were also digesting Tuesday night’s State of the Union address, in which President Bush laid out policy proposals on energy and health care.
In economic news, the Mortgage Bankers Assn. mortgage market index fell 8.4%. The calendar picks up Thursday with reports on December existing home sales and weekly jobless claims.
European markets finished solidly higher Wednesday. The FTSE-100 index in London rose 87.2 points, or 1.4%, to 6,314.8. Germany’s DAX index added 69.44 points, or 1.04%, to 6,748.37. In Paris, the CAC 40 index was up 63.01 points, or 1.13%, to 5,638.08.
Asian markets ended higher. In Japan, the Nikkei 225 index gained 98.83 points, or 0.57%, to 17,507.4. In Hong Kong, the Hang Seng index advanced 51.35 points, or 0.25%, to 20,821.05. Korea’s Kospi index climbed 19.97 points, or 1.47%, to 1,383.06.
Treasury Market
Treasury prices drifted in a quiet session for economic data. The 10-year note was little changed at 98-19/32 for a yield of 4.81%, while the 30-year bond edged down in price to 93-23/32 for a yield of 4.91%. Traders will be focusing on Thursday’s existing home sales data, says S&P.