Investors pushed stocks higher on hopes for more good earnings from big technology companies. Tech shares pulled the market higher again Thursday, a day after stocks surged on a strong forecast from Intel.
NEW YORK (AP) — Investors pushed stocks higher on hopes for more good earnings from big technology companies.
Tech shares pulled the market higher again Thursday, a day after stocks surged on a strong forecast from chip maker Intel Corp.
The tech-heavy Nasdaq advanced for the seventh straight day and closed at its highest level since October ahead of profit reports from Internet search company Google Inc. and computer maker International Business Machines Corp.
An apparent turn in sentiment from economist and New York University professor Nouriel Roubini helped lift the market. Roubini’s statement that the worst of the economy’s troubles are past was notable because he has been deeply pessimistic about the economy. Roubini was one of the few experts to have predicted the global financial crisis.
Some analysts attributed the buying to short covering, where investors have to buy stock after having earlier sold borrowed shares in a bet that the market would fall.
Stocks continued the week’s sprint-and-jog play, carving more modest gains after surging the day before. The market surged Monday followed by a flatter day Tuesday.
Dan Deming, a trader with Strutland Equities in Chicago, said tech stocks rose because investors were afraid they would miss out on Google and IBM, which both reported better-than-expected results after the closing bell.
“It’s kind of feeding on itself because you’re seeing these earnings come in from the tech sector, particularly, showing pretty good numbers,” he said.
The jump in stocks this week halted a monthlong slide that came as investors worried that a huge rally in March and April on hopes for an economic recovery had gone too far. This week’s earnings reports have given investors some of the confirmation that the economy isn’t as bad as feared, but they still want to see more evidence of a turnaround.
According to preliminary calculations, the Dow rose 95.61, or 1.1 percent, to 8,711.82. The Standard & Poor’s 500 index rose 8.06, or 0.9 percent, to 940.74.
The Nasdaq composite index rose 22.13, or 1.2 percent, to 1,885.03, its best finish since Oct. 3.
Bond prices rose. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.58 percent from 3.62 percent late Wednesday.
Investors looked past a stronger profit report from JPMorgan Chase & Co., which reported big gains in its investment banking business, held back somewhat by loan losses.
“A lot of traders went into earnings with very low expectations and they are happy the world hasn’t fallen apart and we’re seeing solid results,” said Anthony Conroy, managing director and head trader for BNY ConvergEx Group. “A lot of people that were short are starting to cover because of improved earnings that have come out.”
Financial stocks lagged the rest of the market after small-business lender CIT Group Inc. said negotiations with federal regulators about a rescue broke off. Investors are worried the company could file for bankruptcy protection. CIT tumbled $1.23, or 75 percent, to 41 cents.
JPMorgan said it generated record revenue, spurred on by strong investment banking operations. Its results come two days after Goldman Sachs Group Inc. also topped expectations with much stronger results in underwriting and trading. JPMorgan slipped 13 cents to $36.13.
Strong earnings from the banks have encouraged investors about the economy. The results also show that many of the nation’s biggest banks have quickly recovered from the collapse of credit markets last fall that led to the failure of Lehman Brothers and near collapse of American International Group Inc.
Ahead of their reports, Google rose $4.43, or 1 percent, to $442.60, while IBM rose $3.42, or 3.2 percent, to $110.64.
In economic news, the Labor Department said new claims for unemployment insurance plunged last week by 47,000 to 522,000, the lowest level since early January. Economists polled by Thomson Reuters predicted an increase to 575,000. The improved data, however, might have been affected by the timing of automobile plant shutdowns.
The dollar fell against other currencies. Gold prices fell.
Benchmark crude rose 48 cents to settle at $62.02 a barrel on the New York Mercantile Exchange.
About two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 1.2 billion shares, compared with 1.4 billion shares traded Wednesday.
The Russell 2000 index of smaller companies rose 6.38, or 1.2 percent, to 522.02.
Overseas, Britain’s FTSE 100 rose 0.4 percent, Germany’s DAX index rose 0.6 percent, and France’s CAC-40 gained 0.9 percent. Japan’s Nikkei stock average rose 0.8 percent.