Stocks rally to new 2010 highs

The Dow finishes up for the eighth straight week. Advances for Merck and homebuilders are offset by weakness in Qualcomm and Amazon.com. Greece will seek a bailout.

By Charley Blaine Apr 23, 2010 2:29PM

Market DispatchesUpdated at 3 p.m. ET, April 24


Stocks finished at their highest levels since 2008 on Friday as investors appeared to shrug off weakness among some key technology stocks and Greece's call for new financial assistance.


A late rally pulled the major averages well into the black for the day. It left the Nasdaq Composite Index ($COMPX) just short of a 100% gain since the March 2009 market bottom .


The Dow Jones industrials ($INDU) closed up 70 points to 11,204. The Standard & Poor's 500 Index ($INX) climbed 9 points to 1,217. The Nasdaq finished up 11 points to 2,530. The index is up 99.4% from its March 9, 2008, close of 1,268.64.


The Dow, up 1.6% for the week, and the Nasdaq, up 1.9%, finished with their eighth weekly gains in a row. The Dow's streak is its longest since an eight-week streak between November 2003 and January 2004. The blue chips are up 7.4% for the year. 

Article continues below

 

The S&P 500 was up 2.1% for the week, posting its seventh weekly gain in the last eight weeks. It's up 9.2% for the year. The Nasdaq is up 11.5% for the year.

 

The rally was a signal that many investors believe the economic recovery is gaining strength and may be moving beyond fragile.

 

"Things are starting to fall into place in different areas of the economy," Jack Ablin, chief investment officer at Harris Private Bank told Bloomberg News. The market, he added, "telling us a pretty good story."

 

It was a great day to own stocks in homebuilders. It was also a great day to own American Express (AXP)Xerox (XRX) or Western Digital (WDC).

 

It wasn't so good to own Amazon.com (AMZN), Qualcomm (QCOM) or Microsoft (MSFT). (Microsoft is the publisher of MSN Money.)

 

Declines in the three stocks limited the Nasdaq's overall performance and offset a 1.6% gain to $270.83 for Apple (AAPL).

 

 

The market's strong finish bodes well for next week. The week will be dominated by earnings for big oil companies, including Exxon Mobil (XOM) on Thursday and Chevron (CVX) on Friday.

 

In addition, the Federal Reserve's Federal Open Market Committee will hold a two-day meeting. The Fed is not expected to raise short-term rates, but it may signal Wednesday afternoon that a rate increase is coming.


Markets for the week














4/23/2010

4/16/2010

% chg.

YTD chg.
Dow industrials

11,204.28

11,018.66

1.7%

7.4%
S&P 500

1,217.28

1,192.13

2.1%

9.2%
Nasdaq 

2,530.15

2,481.26

2.0%

11.5%
Russell 2000

741.92

714.62

3.8%

18.6%
Crude oil 

$85.12

$83.24

2.3%

7.3%
(per barrel)











U.S. Dollar Index 

81.49

80.94

0.7%

4.2%
10-yr. Treasury

3.82%

3.77%

1.2%

-0.7%
Gold

$1,153.70

$1,136.90

1.5%

5.2%
(per troy ounce)











 

New-home sales offset Greek worries 

Getting the indexes to these highs on Friday required a bit of drama.

The market opened lower on word that Greece will seek upward of $60 billion in aid from the European Union and International Monetary Fund.


"There is a real danger to the economy, and we cannot accept that," Prime Minister George Papandreou said in a televised statement. "The time that the markets won't give us, the mechanism will."

 

But then the Commerce Department said new-home sales jumped by 27% in March. And the market abruptly turned higher.

 

Homebuilding shares were up sharply.  Lennar (LEN) was up 4% to $20.53. Pultegroup (PHM) added 5.7% to $13.19, and the Philadelphia Housing Sector Index ($HGX) rose 2.9% to 131 and climbed 11.1% for the week, its best weekly gain since July 2009.


At the same time, the government said orders for most durable goods climbed, indicating the U.S. economy sped up heading into the second quarter.

 

There was one weakness in the report: aircraft orders, which may have more to do with how the government counts Boeing's (BA) orders than anything else. The government counts an order when cash changes hands.


Crude oil pushed higher on the expectation that the recovery has strength, settling at $85.12, up 1.7% on the day. Crude was up 2.3% on the week and is up 7.3% on the year.


Gold, meanwhile, rose $10.80 to $1,153.70. Gold was up 1.5% for the week and is up 3.5% in April.


Energy shares were higher. Two exceptions: BP (BP) and Transocean (RIG). Both were lower in the aftermath of a Gulf of Mexico rig explosion that killed 11 workers. Merck


Meanwhile, Merck (MRK) jumped 5% to $35.46 -- tops among the 30 Dow stocks -- after announcing a $150 million charge in the first quarter due to an eliminated tax benefit for its retirees' prescription drug program.

 

The company says health care legislation will cost it $300 million to $500 million in sales in 2011.


But the stock moved higher because those numbers are a far smaller percentage of total company sales than rival drug makers.

 

Energy prices -- New York close
 

Fri.

Thur.

Month chg.

YTD chg.
Crude oil 

$85.12

$83.70

1.62%

7.26%
(per barrel)











Heating oil

$2.2505

$2.2150

3.28%

6.38%
(per gallon)











Natural gas 

$4.2570

$4.1280

10.03%

-23.60%
(per mil. BTU)











Unleaded gasoline

$2.3531

$2.3002

1.87%

14.62%
(per gallon)











Retail gasoline

$2.8510

$2.8550

1.89%

8.03%
(per gallon; AAA)












The winners suggest a strong economy

American Express was up 2.7% to $48.05 after reporting that first-quarter profit doubled as consumers boosted spending.


Xerox climbed 8.3%  to $11.32, after rising to $11.72 earlier -- its highest intraday price since September 2008. The largest maker of high-speed color printers forecast second-quarter profit that beat analysts’ estimates as spending on its printer services rebounds. Western Digital


Western Digital, one of the largest manufacturers of computer hard drives, jumped 9.9% to $44.71. Late Thursday, the company reported fiscal-third-quarter profit of $400 million, or $1.71 a share, up 700% from $50 million, or 22 cents a share, a year ago.


Revenue jumped 63% to $2.6 billion from $1.6 billion a year ago. Analysts had expected earnings of $1.54 and revenue of $2.5 billion.


Amazon and Qualcomm face issues

Amazon.com and Qualcomm were the big issues for technology shares.


Amazon was off 4.3% to $143.63. The online retailer predicted second-quarter earnings that missed analysts’ estimates. Bloomberg News suggested the guidance was a signal that Amazon's profitability may come under pressure as consumers’ tastes shift to digital books and movies. Amazon.com


Qualcomm was off 2.8% to $38.25 and is down 12% since Tuesday. On Wednesday, when it reported fiscal-second-quarter earnings, it offered weak guidance for its third quarter. And analyst Chris Bulkey of Technology Research Group suggested in a note on TheStreet.com that the stock could move still lower.


Microsoft was off 1.4% to $30.96 after fiscal-third-quarter revenue came up short of the most optimistic forecasts. Microsoft earned $4 billion, or 45 cents a share, up 35% from a year ago on a 6.3% revenue gain to $14.5 billion. 


"With technology in general and Microsoft in particular, you're going to get this issue where it's not good enough or it's already in the stock and it sells off a little bit," Dave Stepherson, a fund manager at Hardesty Capital Management in Baltimore, told Bloomberg News.

 

Short hits from the markets -- New York close
 
 Fri.

Thur.

Month chg.

YTD chg.
Treasury yields




 





13-week Treasury bill

0.155%

0.150%

3.33%

210.00%
5-year Treasury note 

2.593%

2.540%

1.29%

-3.46%
10-year Treasury note

3.817%

3.772%

-0.42%

-0.68%
30-year Treasury bond

4.668%

4.636%

-1.00%

0.58%
Currencies







 

 
U.S. Dollar Index

81.498

81.682

0.25%

4.19%
British pound

$1.5382

$1.5399

1.40%

-4.91%
(in U.S. $)











U.S. $ in pounds

£0.6501

£0.6494

-1.38%

5.16%
Euro in dollars

$1.3376

$1.3293

-1.16%

-6.67%
(in U.S. $)











U.S. $ in euros

€ 0.7476

€ 0.7523

1.18%

7.15%
U.S. $ in yen 

94.25

93.43

0.66%

1.34%
Canada dollar

$1.001

$1.000

1.48%

5.24%
(in U.S. $)











U.S. dollar 

$1.000

$1.000

-1.46%

-4.99%
(in Canadian $)











Commodities

 

 

 

 
Gold

$1,153.70

$1,142.90

3.52%

5.25%
(per troy ounce)











Copper

$3.5130

$3.4865

-1.14%

4.98%
(per pound)











Silver

$18.1920

$18.0090

3.80%

8.00%
(per troy ounce)











Corn

$3.5300

$3.6225

2.32%

-14.84%
(per bushel)











Crude oil 

$85.12

$83.70

1.62%

7.26%
(per barrel)










 
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