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Spokane, Washington  Est. May 19, 1883

Stocks edge higher despite bad news

Associated Press

Wall Street eked out modest gains Friday to finish the week higher, overcoming tepid earnings from Microsoft Corp. and a fresh surge in crude oil futures to extend Wall Street’s rally for a fourth consecutive week.

Microsoft’s after-hours earnings report Thursday initially failed to provide any lift, while the jump in oil prices also stymied trading for much of the session. A barrel of light crude was quoted at $58.64, up $1.51, on the New York Mercantile Exchange.

Yet investors’ optimism, buoyed by generally strong earnings throughout the week, asserted itself in late trading and produced modest gains for the major indexes. Maintaining that optimism, however, with stocks near four-year highs, will be difficult in the days ahead.

“The markets are just treading water here,” said Michael Sheldon, chief market strategist at Spencer Clarke LLC. “Despite a generally positive week of earnings, the markets are in for a bit of consolidation or profit-taking over the next few days.”

The Dow Jones industrial average rose 23.41, or 0.22 percent, to 10,651.18.

Broader stock indicators also made gains. The Standard & Poor’s 500 index climbed 6.64, or 0.54 percent, at 1,233.68, while the Nasdaq composite index gained 1.14, or 0.05 percent, at 2,179.74.

Bonds retraced much of Thursday’s steep losses, with the yield on the 10-year Treasury note falling to 4.22 percent from 4.29 percent late Thursday. The dollar edged higher against most major currencies, recovering from a sharp drop Thursday after China’s decision to revalue its currency. Gold prices also rose.

Trading was somewhat lackluster due to a dearth of economic news and the typical light volume of a summer Friday, but the late rally extended Wall Street’s winning streak to four straight weeks. For the week, the Dow edged 0.1 percent higher, the S&P gained 0.47 percent and the Nasdaq rose 1.06 percent.

Analysts noted that the markets rallied even as oil prices moved to their highs of the session, showing that investors are looking forward with optimism.

“Considering this is a Friday in July, the market’s a little more constructive than I’d expect it to be,” said Richard Madigan, equity analyst with J.P. Morgan Private Bank. “We’ve had a few earnings issues, but they’re overall pretty good. I think the market wants to consolidate here and maybe then move up some more.”

Dow component Microsoft posted a 37 percent gain in net earnings, but a large part of that came in a tax benefit, and analysts worried that the company’s operating earnings weren’t seeing stronger growth. Microsoft lost 68 cents to $25.76.

Advancing issues outnumbered decliners by about 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 1.79 billion shares, compared with 2.14 billion on Thursday.

The Russell 2000 index of smaller companies was up 10.68, or 1.6 percent, at 677.78, an all-time high.

Overseas, Japan’s Nikkei stock average fell 0.78 percent. In Europe, Britain’s FTSE 100 was up 0.39 percent, France’s CAC-40 lost 0.23 percent for the session, and Germany’s DAX index rose 0.15 percent.