Stocks higher on Microsoft earnings
NEW YORK – Stocks advanced Friday as strong earnings from Microsoft Corp. and an optimistic outlook from Countrywide Financial Corp. outweighed investor concerns about the economy.
Housing market news over the week was glum; oil prices surged to record highs. And though corporate earnings have so far been mixed, investors have been heartened by good news for individual companies.
Friday’s report from Countrywide that it expects to return to profitability soon, despite a big third-quarter loss, gave investors hope that the problems in the housing market are contained and that U.S. consumers still have spending power. Thursday night’s strong report from Microsoft inspired strong buying throughout the technology sector.
“The market is higher for just two reasons – Countrywide and Microsoft,” said Peter Boockvar, equity strategist at Miller Tabak. “You take those two stocks out of the equation and there is no reason for the market to be higher. Microsoft single-handedly is driving the Nasdaq.”
Friday’s gain followed several days of erratic performances by the stock market. Mixed profit reports and data showing economic weakness has made investors uncertain whether the market is overvalued.
According to preliminary calculations, the Dow Jones industrial average rose 134.78, or 0.99 percent, to 13,806.70.
Broader stock indicators also gained. The Standard & Poor’s 500 index rose 20.88, or 1.38 percent, to 1,535.28, and the technology-dominated Nasdaq composite index advanced 53.33, or 1.94 percent, to 2,804.19.
High oil prices didn’t dampen investors’ spirits either. After spiking above $92 a barrel in Asian trading overnight, December crude futures rose $1.40 to settle at $91.86 a barrel on the New York Mercantile Exchange.
“Because oil prices are so high, our nation’s oil bill has gone up. We’re exporting dollars to pay for oil and our counterparties are reinvesting those dollars back in our markets – the so-called petrodollars finding their way back,” said Tom McManus, investment strategist with Banc of America Securities.
Even as stocks advanced, investors poured money into commodities markets as a hedge against a falling dollar, which hit another record low against the euro. Gold futures rose $16.50 to close at $787.50 an ounce, the highest price since January 1980. Energy, metals and agriculture futures all moved higher.
Treasury bonds turned lower as stocks barreled higher. The yield on the 10-year Treasury note, which moves inversely to the price, rose to 4.39 percent from 4.38 percent late Thursday.