Tech earnings propel markets
Wall Street bounded higher Wednesday, lifting the Nasdaq composite index well over 1% after profit reports from Yahoo and Sun Microsystems restored investors’ confidence in the tech sector.
Tech stocks have borne most of Wall Street’s concern about the health of corporate earnings in recent weeks. Restive investors, taking their cues from a flurry of profit reports, have been at turns pleased and doubtful about the prospects for profit growth to drive stocks higher after a sharp run-up in 2006.
There was little overall movement in the energy and health sectors in response to President Bush’s State of the Union address Tuesday evening, during which he called for expanded health insurance coverage and a 20% reduction in the country’s consumption of gasoline over the next 10 years. Shares of some alternative-energy companies pulled back after rising sharply before the speech.
The tech-laden Nasdaq composite jumped 34.87 points, or 1.4%, to 2,466.28. The gain marked the Nasdaq’s biggest one-day increase since early December.
“I think investors were waiting with the techs for the earnings to come out,” said Neil Massa, an equity trader at John Hancock Funds. “Investors were in the show-me mode. They had to be shown good numbers because they didn’t want to take anything for granted because they had been laggards for a while.”
The broader market also advanced strongly. The Dow Jones industrial average rose 87.97 points, or 0.7%, to a record 12,621.77 after gaining 56.64 points Tuesday. The Dow’s previous record was 12,582.59 set Jan. 16. The index has hit 26 record closes since the start of October.
The Standard & Poor’s 500 index reached a six-year high, rising 12.14 points, or 0.9%, to 1,440.13.
The New York Stock Exchange composite hit a record high, adding 0.8% to 9,268.49.
U.S. Treasury bond prices were little changed in thin trading after an auction of two-year notes left yields steady near three-month highs. The Treasury sold $20 billion of the two-year securities at a yield of 4.93%. The yield on the benchmark 10-year note was flat at 4.81%.
Crude oil futures rose 33 cents to $55.37 a barrel on the New York Mercantile Exchange as investors grew more confident that the Organization of the Petroleum Exporting Countries would make good on production cuts and as cooler weather took hold in the Northeast. Prices rose even as U.S. government figures showed a rise in crude, gasoline and distillate inventories last week. On Tuesday, oil rose more than $2 a barrel on news that the United States plans to double the size of its Strategic Petroleum Reserve.
In other market highlights:
* Exxon Mobil rose 41 cents to $74.90. The energy sector appeared to take in stride the president’s call for austerity in gasoline consumption, though some companies that make a business of alternative energy products were lower. Xethanol, an ethanol maker, fell 25 cents to $2.82, while larger rival Archer Daniels Midland declined 54 cents to $32.09.
* Healthcare stocks also appeared little moved by the speech. Insurer Aetna fell 44 cents to $41.74, while drug maker Pfizer rose 45 cents to $26.82.
* Yahoo jumped $1.98, or 7.3%, to $28.94 after the Internet-search company’s fourth-quarter profit topped Wall Street’s estimates. The company unveiled an ad search technology and said it expected to draw more revenue from each page view during the year.
Sun Microsystems, a maker of server and storage products, rose 49 cents, or 8.7%, to $6.15 after the company reported its first quarterly profit in years as revenue increased. Earnings exceeded forecasts.
Seagate Technology, which makes disc drives, surged $2.17 to $28.35 on its quarterly results.
* Other tech issues rising included Cisco Systems, up 85 cents to $26.89; Apple, up $1 to $86.70; and Xilinx, up $1.01 to $24.40.
Corning, which produces fiber optics and specialty materials, jumped $2.06, or 11%, to $20.90 after posting stronger-than-expected quarterly profit.
But Advanced Micro Devices fell $1.48, or 8.5%, to $16.03 after the chip maker swung to a loss from a profit in its fourth quarter. Sales of high-margin server chips were flat in the quarter.
* McDonald’s fell 69 cents to $44.16 after some analysts said operating profit at the fast-food chain came in lower than expected. Overall fourth-quarter earnings were in line with Wall Street’s estimates. The company’s profit more than doubled amid a spinoff of a burrito chain and strong sales in Europe.
* Among new stock issues, AeroVironment edged down 3 cents to $23.90. Shares of the Monrovia-based company had soared $6.93, or 41%, on their first day of trading Tuesday. The company (ticker symbol: AVAV) produces small unmanned aircraft systems for the military.
* In foreign trading, major European markets closed at multiyear highs. The Mexican market index surged 2% to a record 27,338.
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Reuters was used in compiling this report.
