Heartening results spark Wall St. rally

The stock market rallied sharply Friday, capping its best week since February, after an array of companies posted results that topped analysts’ estimates.

The market, battered last week by General Electric’s disappointing results, climbed after Citigroup announced a first-quarter loss than was narrower than the most pessimistic projections and Google and Caterpillar reported that overseas growth boosted their profits. Honeywell International also advanced on better-than-forecast numbers.

All 10 industry groups in the Standard & Poor’s 500 index rose. For the week, it and the Dow Jones industrial average jumped 4.3%, while the Nasdaq composite index climbed 4.9%.

“People are coming to the realization that, excluding the finance sector, the earnings profile looks pretty good,” said Michael Mullaney, a money manager at Fiduciary Trust Co. Google’s results “put a calming effect on the entire market, especially the technology sector.”

The S&P; 500 added 24.77 points, or 1.8%, to 1,390.33, its highest level since Feb. 1. Although the index has rebounded 9.2% from a 19-month low on March 10, it is still down 5.3% in 2008.

The Dow climbed 228.87 points, or 1.8%, to 12,849.36, a three-month high.

The tech-dominated Nasdaq advanced 61.14 points, or 2.6%, to 2,402.97.

The Russell 2,000 index of small-company stocks gained 13.07 points, or 1.8%, to 721.07, and was up 4.8% for the week.

Three stocks rose for each that fell on the New York Stock Exchange. European shares advanced, while Asia’s benchmark index retreated.

Treasury yields rose initially along with stocks but finished lower. The yield on the benchmark 10-year Treasury note fell to 3.71% in late trading from 3.73% late Thursday.

Profits have exceeded analysts’ estimates at 58 of the 100 companies in the S&P; 500 that have released first-quarter results. Analysts currently estimate that corporate earnings overall fell an average of 13.7% in the period.

Citigroup rose $1.08, or 4.5%, to $25.11 after it reported a drop in revenue and a loss that were smaller than expected.

“A lot of people were worried that we’d have a big negative surprise,” said Edgar Peters, chief investment officer at PanAgora Asset Management in Boston. “When we didn’t have a big negative surprise, that was a positive surprise.”

Citigroup helped carry the S&P; 500 financial index to a 1.8% advance and extend the gauge’s gain for the week to 5.2%.

Bank of America, the largest U.S. bank by market value, rallied $1.09, or 2.9%, to $38.56. JPMorgan Chase rose 64 cents, or 1.4%, to $45.76.

Google rallied $89.87, or 20%, to $539.41, the most since its 2004 initial public offering. The Web search giant said sales surged 46% as more users clicked on text advertisements. Overseas sales, accounting for 51% of revenue, increased 55%.

Caterpillar, the world’s biggest maker of earthmoving equipment, rose $6.69 to $85.28, its steepest rally in more than seven years. Its first-quarter earnings rose 13%, topping analysts’ estimates, as sales to China and India increased. Last year the company garnered 62% of its revenue outside the U.S.

The dollar has fallen 6.1% against a basket of six major currencies this year after an 8.3% decline last year, making U.S. products cheaper overseas and increasing the dollar value of sales denominated in those currencies. Coca-Cola and IBM this week also reported profits that were boosted by the dollar’s drop.

Companies in the S&P; 500 collected 44% of their sales from outside the U.S. in 2006 and an estimated 47% to 48% in 2007, according to Standard & Poor’s.

Honeywell climbed $3.59, or 6.3%, to $60.99. The maker of building and aircraft controls and oil refining equipment said first-quarter earnings rose 22%, more than estimated. The company also said its 2008 profit would be at the high end of a range it offered in December.

Schlumberger, the No. 1 oil-field contractor, added $6.55, or 6.9%, to $101.85. The company said first-quarter profit rose 13% as record oil prices prompted increased drilling by customers worldwide.

Exxon Mobil rose 62 cents to $94, its highest price of the year, as crude futures climbed $1.83 to a record $116.69 a barrel in New York trading. An index of 36 energy stocks in the S&P; 500 gained 1.9%, marking its 14th advance in the last 15 days.

E-Trade Financial rose 35 cents, or 9.7%, to $3.97, paring its decline over the last year to 82%. The online brokerage posted a first-quarter loss of $91.2 million but predicted a return to profitability this year.

Gold producer Newmont Mining slid $1.25, or 2.6%, to $46.27 after gold futures tumbled. They closed at $912.20 an ounce, down $27.60.