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Stocks Close Firmly Positive On Upbeat Earnings News - U.S. Commentary


After ending the previous session mixed, stocks moved notably higher over the course of the trading day on Friday. The markets benefited from a positive reaction to the latest batch of earnings news, which overshadowed a disappointing housing report.

The major averages ended the day firmly in positive territory, with the S&P 500 closing above 1,500. The Dow rose 70.65 points or 0.5 percent to 13,895.98, the Nasdaq climbed 19.33 points or 0.6 percent to 3,149.71 and the S&P 500 advanced 8.14 points or 0.5 percent to 1,502.96.

With the gains on the day, the Dow and the S&P 500 reached new five-year highs, and all three major averages moved higher for the fourth straight week. The Nasdaq edged up by 0.5 percent, while the Dow and the S&P 500 jumped by 1.8 percent and 1.1 percent, respectively.

The strength on Wall Street came on the heels of some upbeat earnings news, with Procter & Gamble (PG) posting a notable gain after releasing it fiscal second quarter results.

P&G reported adjusted earnings of $1.22 per share on revenues of $22.2 billion, while analysts had expected earnings of $1.11 per share on revenues of $21.9 billion. The consumer products giant also raised its guidance for 2013.

Starbucks (SBUX) also saw notable strength after reporting fiscal first quarter earnings that rose year-over-year and came in line with analyst estimates. The company also reaffirmed its full-year guidance.

Shares of Microsoft (MSFT) saw a more modest upward move after the software giant reported fiscal second quarter earnings that fell compared to the year-ago period but exceeded analyst estimates.

With the focus on earnings, traders largely shrugged off a report from the Commerce Department showing an unexpected drop in new home sales.

The report showed that new home sales fell 7.3 percent to a seasonally adjusted annual rate of 369,000 in December from the revised November rate of 398,000. While the drop came as a surprise to economists, the unexpected decrease came from a November level that was significantly upwardly revised.

Economists had expected new home sales to climb to 388,000 from the 377,000 originally reported for the previous month.

Sector News

Extending the strong upward move seen in the previous session, internet stocks saw considerable strength on the day. The NYSE Arca Internet Index surged up by 2.1 percent, reaching its best closing level in twelve years.

Netflix (NFLX) helped to lead the internet sector higher once again, with the online video service provider rising by 15.5 percent after jumping 42.2 percent on Thursday.

Significant strength also emerged among oil service stocks, as reflected by the 1.4 percent gain posted by the Philadelphia Oil Service Index. Halliburton (HAL) turned in one of the sector's best performances after reporting better than expected fourth quarter results.

Software stocks also turned in a strong performance on the heels of the news from Microsoft. The Dow Jones Software Index rose by 1.4 percent to a four-month closing high.

Networking, semiconductor, and biotech stocks also saw notable strength on the day, while gold stocks came under significant selling pressure amid a decrease by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Friday. While Japan's Nikkei 225 Index surged up by 2.8 percent, China's Shanghai Composite Index fell by 0.5 percent.

Meanwhile, the major European markets all moved to the upside on the day. The U.K.'s FTSE 100 Index edged up by 0.3 percent, while the French CAC 40 Index rose by 0.7 percent and the German DAX Index jumped by 1.4 percent.

In the bond market, treasuries saw considerable weakness after ending the previous session modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 10.3 basis points to 1.947 percent.

Looking Ahead

Traders will be faced with a number of potentially market moving events next week, including a two-day Federal Reserve meeting. While the Fed is not expected to announce a change in policy, traders are likely to keep a close eye on the central bank's statement.

Along with the Fed meeting, trading could also be impacted by the release of a slew of economic data, including the Labor Department's closely watched monthly jobs report. Reports on fourth quarter GDP, durable goods orders, and national manufacturing activity are also likely to attract attention.

Additionally, Caterpillar (CAT), Yahoo (YHOO), Amazon (AMZN), Ford (F), Pfizer (PFE), Boeing (BA), UPS (UPS), and Exxon Mobil (XOM) are just a few of the well known companies scheduled to release their quarterly results next.

by RTTNews Staff Writer

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