SENSEX NIFTY
Jan 24, 2013, 10.04 AM IST | Source: Reuters

S&P knocks on 1500 barrier as tech earnings extend rally

The S&P 500 extended its winning streak to six days on Wednesday after stronger-than-expected profits from IBM and Google alleviated investor concerns about the technology sector.

S&P knocks on 1500 barrier as tech earnings extend rally

The S&P 500 extended its winning streak to six days on Wednesday after stronger-than-expected profits from IBM and Google alleviated investor concerns about the technology sector.

IBM's and Google's earnings, released after Tuesday's close, followed on the heels of stronger US economic data, which have pushed the Dow and S&P 500 to five-year highs.

The S&P sits just 4.7 percent from its all-time closing high of 1,565.15 and the Dow would hit a record close if it gained 2.8 percent.

"People were kind of nervous about earnings coming into this quarter but numbers have shown so far strength in earnings," said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco, citing Google and IBM as examples.

"Technical analysts are looking at this and saying 'the trend is your friend, it's time to be long.'"

Shares in IBM Corp, the world's largest technology services company, climbed 4.4 percent to USD 204.72, in their largest advance in a year, providing just about all of the Dow's 67-point gain.

Also helping the tech sector was a 5.5 percent jump in Google Inc to USD 741.50. The Internet search company reported its core business outpaced expectations and revenue was higher than expected.

The S&P technology sector rose 1.2 percent.

LED maker Cree Inc jumped 22 percent to USD 40.85 after it forecast a higher-than-expected third-quarter profit, and reported results above analysts' estimates.

Upscale leather goods maker Coach Inc plunged 16.4 percent to USD 50.75 after reporting sales that missed expectations.

Clearing a market hurdle, the US House of Representatives passed a Republican-led plan to extend the country's borrowing authority until mid May. This delays a confrontation in Congress similar to one in 2011, which generated a stalemate that triggered the first-ever US debt rating downgrade.

The Dow Jones industrial average rose 67.12 points or 0.49 percent, to 13,779.33, the S&P 500 gained 2.25 points or 0.15 percent, to 1,494.81, and the Nasdaq Composite added 10.49 points or 0.33 percent, to 3,153.67.

The benchmark S&P 500 is a mere 0.35 percent away from hitting 1,500, a level not seen since December 12, 2007.

Thomson Reuters data through Wednesday showed that of the 99 S&P 500 companies that have reported earnings so far, 67.7 percent have topped expectations, above the 65 percent average beat over the past four quarters.

Overall, S&P 500 fourth-quarter earnings rose 2.8 percent, according to Thomson Reuters data. That estimate is above the 1.9 percent forecast at the start of earnings season.

Netflix shares soared 25 percent near USD 130 after reporting fourth-quarter earnings after the closing bell.

McDonald's edged up 0.6 percent to USD 93.48 after reporting a rise in fourth-quarter earnings, lifted by an increase in same-store sales. Fellow Dow component United Technology Corp's earnings fell from the prior year, hurt by large restructuring charges. Its shares rose 0.7 percent to $88.07.

Top US manufacturers sounded a confident note about their expectations for 2013 on Wednesday as fears of the year-end "fiscal cliff" faded into memory.

About 6 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, below the 2012 daily average of about 6.45 billion shares.

On the NYSE, roughly 15 issues fell for every 14 that rose and on Nasdaq seven declined for every five gainers.

ADS BY GOOGLE

video of the day

Don’t try to time market; OMCs, paint cos to benefit: Emkay

Explore Moneycontrol

Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.