Tech stocks lift Dow, Nasdaq; S&P holds flat

Dow Jones gains 0.50%, S&P 500 adds 0.09%, Nasdaq rises 0.37%
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First Published: Thu, Jan 24 2013. 01 34 AM IST
Traders at the New York Stock Exchange on Wednesday. Photo: AP
Traders at the New York Stock Exchange on Wednesday. Photo: AP
New York: The Dow and Nasdaq advanced on Wednesday, lifted by IBM and Google whose stronger-than-expected profits helped to alleviate growing investor concern about the tech sector.
IBM’s and Google’s earnings, released after Tuesday’s close, were the latest reassuring fourth-quarter results that pushed the Dow and S&P 500 to five-year highs as worries about the “fiscal cliff” and euro zone debt crisis faded and earnings became the market’s main focus.
International Business Machines Corp forecast better-than-anticipated 2013 results and also posted fourth-quarter earnings and revenue that beat expectations.
Shares in the world’s largest technology services company climbed 4.9% to $205.71, its biggest advance since July, making it by far the largest boost to theDow.
Worries about the profit potential in the tech sector had increased amid questions about waning demand for Apple Inc products and a weak outlook from Intel Corp last week.
Also helping to boost the tech sector was a 6.4% jump in Google Inc to $747.55. The Internet search company reported its core business outpaced expectations and revenue was higher than expected.
“That is kind of what got the Street’s attention - is that tech was considered an area of vulnerability and now seems to be actually be an area of real strength, and not just in terms of the fourth quarter, but in terms of guidance,” said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
Despite a 1.1% gain in the S&P technology sector , gains on the broader S&P 500 index were limited a day after the benchmark index closed at a fresh 5-year high.
The recent gains have been largely fueled by a stronger-than-expected start to the earning season, pushing the benchmark S&P index near the 1,500 level, last reached on December 12, 2007, and may make additional gains harder to come by after a 4.6 increase for the month.
“It’s only reasonable to expect some sort of resistance when you get to that all-important level, the fact that here it is Jan 23 and we are brushing up against it, is really impressive,” Kenny said.
With tech earnings strong, Thomson Reuters data through Wednesday shows that of the 99 S&P 500 companies that have reported earnings so far, 67.7% have topped expectations, above the 62% average since 1994 and the 65% average over the past four quarters.
The Dow Jones industrial average gained 67.98 points, or 0.50%, to 13,780.19. The Standard & Poor’s 500 Index added 1.36 points, or 0.09%, to 1,493.92. The Nasdaq Composite Index rose 11.50 points, or 0.37%, to 3,154.68.
McDonald’s edged up 0.5% to $93.37 after reporting a rise in fourth-quarter earnings, lifted by an increase in same-store sales. Fellow Dow component United Technology Corp’s earnings fell from the prior year, hurt by large restructuring charges. Shares climbed 0.6% to $87.98.
On the downside, leather-goods maker Coach Inc plunged 15.48% to $51.31 as the S&P’s worst performer after reporting sales that missed expectations. The S&P consumer discretionary sector slipped 0.3%.
After the market closes, investors will scour Apple’s results, with the options market bracing for a big move in Apple shares after its earnings, amid a dramatic plunge for the world’s most valuable publicly traded company. Apple shares rose 0.4% to $507.04 on Wednesday.
Overall, S&P 500 fourth-quarter earnings rose 2.8%, according to Thomson Reuters data. That estimate is above the 1.9% forecast at the start of earnings season, but well below the 9.9% fourth-quarter earnings forecast on Oct. 1, the data showed.
Republican leaders in the U.S. House of Representatives began considering a Republican measure on Wednesday to extend the U.S. debt limit for nearly four months but many Democrats vowed to oppose the measure, calling it a gimmick that sets up a new “fiscal cliff.”
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First Published: Thu, Jan 24 2013. 01 34 AM IST
More Topics: US Stocks | Dow Jones | Nasdaq | S&P | markets |
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