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Stocks Close Mostly Higher On Late-Day Strength - U.S. Commentary


After showing a lack of direction for much of the session, stocks ended Friday's trading mostly higher. The markets benefited from late-day buying interest that lifted the Dow and the S&P 500 to five-year closing highs.

The Dow ended the day up 53.68 points or 0.4 percent at 13,649.70, and the S&P 500 climbed 5.04 points or 0.3 percent to 1,485.98. While the Nasdaq also moved to the upside in late-day trading, the tech-heavy index finished the day down 1.29 points or less than a tenth of a percent at 3,134.71.

For the week, the Nasdaq edged up by 0.3 percent, while the Dow and the S&P 500 rose by 1.2 percent and 0.9 percent, respectively.

The late-day strength on Wall Street was partly due to a positive reaction to the latest news about the impending showdown over the U.S. debt limit.

House Republican leaders indicated they will hold a vote to authorize a three-month temporary debt limit increase to give lawmakers time to pass a budget that reduces spending.

White House Press Secretary Jay Carney said he was encouraged by signs the GOP may back off their insistence on holding the economy hostage to extract drastic cuts in Medicare, education and other programs that benefit the middle class.

The choppy trading seen earlier in the day reflected a mixed reaction to the latest earnings news, with upbeat results from Morgan Stanley (MS) and General Electric (GE) offset by disappointing results from Intel (INTC) and Capital One (COF).

Financial giant Morgan Stanley surged up by 7.9 percent after reporting a better than expected fourth quarter profit compared to a year-ago loss.

GE also posted a notable gain after the industrial conglomerate reported fourth quarter earnings that exceeded analyst estimates on revenues that increased by more than anticipated.

On the other hand, semiconductor giant Intel came under pressure after reporting fourth quarter earnings and revenues that fell year-over-year.

While Intel's quarterly earnings exceeded analyst estimates, the revenues came in below expectations and the company also gave downbeat revenue guidance for the first quarter. Shares of Intel fell 6.3 percent.

Shares of Capital One Financial also fell sharply after the lender reported fourth quarter earnings that rose sharply year-over-year but came in below estimates. The company also provided disappointing guidance. Capital One tumbled by 7.5 percent.

Sector News

While most of the major sectors ended the day showing only modest moves, considerable strength was visible among oil service stocks. The Philadelphia Oil Service Index advanced by 2 percent to its best closing level in four months.

Schlumberger (SLB) helped to lead the oil service sector higher, surging up by 4.3 percent after reporting better than expected fourth quarter results.

Brokerage stocks also saw notable strength following the news from Morgan Stanley, with the NYSE Arca Broker/Dealer Index rising by 1.5 percent. The gain lifted the index to a nine-month closing high.

Healthcare provider, telecom, and utilities stocks also moved to the upside on the day, while modest weakness was visible among airline and pharmaceutical stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday. Japan's Nikkei 225 Index surged up by 2.9 percent, while Hong Kong's Hang Seng Index advanced by 1.1 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.'s FTSE 100 Index rose by 0.4 percent, the French CAC 40 Index edged down by 0.1 percent and the German DAX Index fell by 0.4 percent.

In the bond market, treasuries moved back to the upside after coming under pressure in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.2 basis points to 1.843 percent.

Looking Ahead

Earnings news is likely to be in focus next week, with DuPont (DD), Apple (AAPL), McDonald's (MCD), IBM (IBM), Microsoft (MSFT), Honeywell (HON), and Procter & Gamble (PG) among the big-name companies scheduled to release their quarterly results.

While the economic calendar for next week is relatively light compared to the slew of data released over the past week, traders are also likely to keep an eye on reports on weekly jobless claims, leading economic indicators, and new and existing home sales.

by RTTNews Staff Writer

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