Dow hits 13,000 on economic data, stimulus hopes

The blue-chip index reaches a milestone not seen in almost 3 months as reports on GDP growth and consumer confidence come in better than expected. Facebook plunges on lackluster earnings and lack of guidance.

By TheStreet Staff Jul 27, 2012 9:09AM

Updated at 12:30 p.m. ET

By Andrea Tse and wire reports

Stocks rallied Friday after reports on second-quarter U.S. growth and July consumer confidence came in not as weak as expected and as traders worldwide continued to hope for greater central bank intervention in the eurozone.

The Dow Jones Industrial Average ($INDU) was up 118 points at 13,006, reaching the millennial milestone for the first time since May 8. The S&P 500 ($INX) was up 16 points at 1,376. The Nasdaq Composite ($COMPX) was up 42 points at 2,935.

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U.S. consumer sentiment fell to its lowest level of the year so far as Americans took a dim view of their employment and income prospects, The Associated Press reported. The Thomson Reuters/University of Michigan's index fell to 72.3 in July from 73.2 in June, the second straight month in which attitudes have cooled and the lowest level since December. The reading came in higher than the expected 72.

The Commerce Department reported that the U.S. economy grew by an annual rate of 1.5% in the second quarter after an upwardly revised 2% increase in the first quarter. The advance estimate was in line with expectations.

The report said growth in the U.S. economy reflected positive contributions from personal consumption expenditures, exports, nonresidential fixed investment, private inventory investment and residential fixed investment. Those were partly offset by less state and local government spending.

U.S. stocks soared Thursday, with investors seizing on a promise by European Central Bank President Mario Draghi to pull out all stops to keep the eurozone intact. The ECB will do "whatever it takes to preserve the euro," he said. The rally also drew confidence from favorable U.S. economic data, including a fall in weekly initial jobless claims and an increase in durable goods orders.

On the corporate front, shares of Facebook (FB) were plunging by double digits after the company on Thursday posted an in-line quarterly profit that failed to impress Wall Street. Facebook reported non-GAAP earnings of $295 million, or 12 cents a share, on revenue of $1.18 billion. Analysts were expecting profit of 12 cents a share in the June-ended period on revenue of $1.15 billion.

Amazon.com (AMZN) delivered mixed second-quarter results Thursday, reporting a profit of $7 million, or 1 cent a share, on revenue of $12.83 billion. The latest results included a net loss of $65 million related to the acquisition and integration of Kiva Systems. Analysts were expecting 2 cents a share on revenue of $12.88 billion. For the third quarter ending in September, Amazon forecast an operating loss of between $50 million and $350 million and revenue ranging from $12.9 billion to $14.3 billion. Wall Street's current consensus estimate is for earnings of 14 cents a share in the current quarter on revenue of $14.09 billion.

Drugmaker Merck (MRK) reported second-quarter earnings excluding items of $1.05 a share, surpassing the Wall Street's target of $1.01 a share.

Barclays (BCS) said Friday that the U.K.'s financial regulator has started a probe of four current and former senior employees, including the bank's finance chief. The issue involves the "sufficiency of disclosure" in relation to fees paid when Barclays conducted an emergency 7.3 billion-euro capital increase with Middle Eastern investors in 2008, according to The Wall Street Journal. The U.K. bank last month reached a settlement with U.K. and U.S. regulators after it admitted to trying to manipulate the London interbank offered rate. Barclays on Friday announced first-half profit that exceeded forecasts.

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