Strong earnings comfort investors
NEW YORK — The Standard & Poor’s 500 index and Nasdaq composite index both reached four-year highs Thursday as investors, unfazed by oil prices nearing $60 per barrel, welcomed a raft of strong earnings reports.
The earnings, led by DaimlerChrysler AG and Bristol-Myers Squibb Co., further fueled investors’ confidence in the stability of the economy. They also helped Wall Street look past a slight rise in first-time jobless claims reported by the Labor Department and another sharp rise in oil prices. A barrel of light crude settled at $59.94, up 83 cents, on the New York Mercantile Exchange.
The question on many investors’ minds, however, was how high the markets can go, and whether the economy over the second half of the year will support those higher share prices.
“Obviously, we had a nice day yesterday, so now I tend to think that we’re digesting all these earnings and figuring out whether we can move higher,” said Jay Suskind, head trader at Ryan Beck & Co. “The news has been very good, but now the market’s pricing in the second half of the year even more.”
The S&P 500 climbed 6.93, or 0.56 percent, to 1,243.72, its best close since June 12, 2001. The Nasdaq gained 12.22, or 0.56 percent, to 2,198.44 for its best showing since June 8, 2001.
The Dow Jones industrial average rose 68.46, or 0.64 percent, to 10,705.55, its highest level since March 15.
Bonds gained ground after the previous session’s selloff, with the yield on the 10-year Treasury note falling to 4.20 percent from 4.26 percent late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
The market’s reaction to second-quarter earnings was notable given the response to first quarter results in April, when the stock markets dropped considerably.
“This time around, we’re seeing a strong reaction to very positive reports,” said Todd Salamone, director of trading and vice president of research at Schaeffer’s Investment Research in Cincinnati. “A lot of economic questions are still out there, but it looks like with these earnings, people are thinking that we’ll be OK through the third quarter, at least.”
DaimlerChrysler surged 9.8 percent, or $4.29, to $48.26 after the company also posted slightly improved earnings. The stock was also helped by CEO Juergen Schrempp’s announcement that he would leave by the end of the year.
Drug maker Bristol-Myers Squibb rose 7 cents to $25.17 as the company posted a 91 percent surge in second-quarter income. Bristol-Myers credited strong sales of new drugs for the better-than-expected quarter. The company surpassed analysts’ forecasts by 11 cents per share.
Dow component Exxon Mobil Corp. said the recent surge in crude oil and natural gas prices were critical to its record second-quarter earnings, which rose 32 percent from a year ago. Although the energy company missed Wall Street’s profit forecasts by a penny per share, Exxon Mobil added 40 cents to $60.