Dow, S&P hit new highs before fading

A decent report on jobless claims and gains for IBM and financial stocks fuel the rally. Big tech stocks pull back. Microsoft and Google earnings disappoint.

By Charley Blaine Jul 18, 2013 2:27PM
Stock market report © CorbisUpdated: 5:53 p.m. ET

Stocks -- mostly -- rallied again on Thursday, with the Dow Jones Industrials ($INDU) and the Standard & Poor's 500 Index ($INX) hitting new closing and intraday highs. The biggest catalysts were a decent report on initial jobless claims and some cheer about second-quarter earnings, but the markets had given up some ground by this afternoon.

Stocks, however, may be weak on Friday after earnings from Google (GOOG) and Microsoft (MSFT) disappointed investors. Shares of both companies fell in regular trading and dropped 4% and 6%, respectively, after hours. (Microsoft owns and publishes Top Stocks, an MSN Money site.)

The rally itself was surprisingly narrow. IBM (IBM) and UnitedHealth Group (UNH) were responsible for more than 75% 0f the Dow's gain by themselves, while financials, including Morgan Stanley (MS) and Bank of America (BAC), were the big drivers among S&P 500 stocks.

The Nasdaq Composite Index ($COMPX) was up as much as 15 points mid-morning, reaching its highest intraday level since October 2000. But the gain melted away almost entirely on weakness among key stocks such as Google (GOOG) and Microsoft (MSFT). Both saw losses in regular trading, and the declines deepened by as much as 5% after hours when results for both companies missed Street estimates.

The Dow closed up 78 points to 15,549. While that was a record close, the blue chips had been up as much as 118 points in the morning. The S&P 500 gained 8 points to 1,689, also a potential closing record, while the Nasdaq was 1 point higher at 3,611.
The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was down 7 points to 3,078.

Google closed down $7.87 to $910.68 and was off 4% to $876.16 after hours. Microsoft fell 30 cents to $35.44 in regular trading and dropped an additional 6% to 33.33 after hours.

Google's second-quarter results disappointed because its cost-per-click (which is basically its average ad rate) fell 6%. That's due to the lower rates that prevail on smart phones. Still, the company earned $3.2 billion, or $9.54 a share, up 16% from a year ago's $2.8 billion or $8.42 a share. Revenue rose 19% to $14.1 billion. The estimate was $14.4 billion.

Microsoft's earnings were lower than expected as declining personal-computer sales ate into revenue. It also took an unexpected $900 million charge for its inventory of unsold Surface tablets. The company earned 59 cents a share, missing a Street estimate of 75 cents a share. Without the Surface write-down, earnings would have been 66 cents. Revenue was up 10% to $19. billion, but that missed a $20.7 billion estimate.

Jobless claims fell to a seasonally adjusted 334,000 for the week ending July 13 from 354,000 a week earlier. It was the third lowest report on claims this year. The four-week moving average fell to 346,000 from 351,250 a week before. The average has been hovering at levels last seen in late 2007 and early 2008.

The major indices are enjoying their best monthly performances since January, with the Dow up some 4.3% in July, the S&P 500 up 5.1% and the Nasdaq up 6%.

Investors appear to have found comfort with the Federal Reserve's strategy in slowing down its $85 billion-a-month bond-buying program, also known as quantitative easing. The Fed has said it wants to slowly wind the program down while still keeping interest rates at ultra-low levels.

Fed Chairman Ben Bernanke told the Senate Banking Committee Thursday that the Fed has made no decision on when or even whether to  trim  at its September meeting. Stocks rose on Wednesday after Bernanke stressed that decisions for the Fed to trim stimulus efforts will hinge on U.S. economic growth.

The 10-year Treasury yield rose to 2.515% from 2.491% on Wednesday.

Crude oil prices were surging again. Light sweet crude (-CL), the benchmark U.S. oil, settled at $108.04 a barrel, up $1.56. That was the highest settlement price since $108.09 on March 19, 2012. Speculators were bidding prices higher, betting on rising domestic demand. At the same time, Brent crude, a heavy influence on U.S. gasoline prices, was up 9 cents to $108.70 a barrel in London.

The national average price for gasoline was $3.669 a gallon, up 1.2 cents from Wednesday and up 4.4% for the month, according to AAA's Daily Fuel Gauge Report.

Energy stocks were higher as well.

Gold (-GC) settled at $1,284.20 an ounce, up $6.70 on the day and nearly 5% in July. It's still down 23.4% for the year.

While IBM and Bank of America were the Dow leaders in percentage terms, Intel (INTC) and American Express (AXP) were the Dow laggards, falling 91 cents to $23.24 and $2.79 to $74.01, respectively.

The S&P 500's winners were Johnson Controls (JCI), Safeway (SWY) and United Health (UNH). Laggards were Amphenol (APH), Sherwin-Williams (SHW) and eBay (EBAY).

The Nasdaq-'s weakest links in regular trading were eBay, Intel, Qualcomm (QCOM) and Amazon.com (AMZN).

Quarterly results and guidance from Intel and eBay late Wednesday disappointed investors.

Dell (DELL) rose 24 cents to $13.12 after the company pushed back its special shareholder meeting to approve Michael Dell's $24.4 billion buyout until July 24. The move was made in a bid to secure more support.


The decision came as Reuters reported the deal was about 150 million votes short of approval, despite picking up support from several large investors. Big investors Carl Icahn and Southeastern Asset Management have vocally opposed the buyout, saying it undervalues Dell.


A total of 214 stocks hit all-time highs on Thursday, including CBS (CBS), EOG Resources (EOG), Honeywell International (HON), 3M (MMM), PepsiCo (PEP) and Union Pacific (UNP).


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59Comments
Jul 18, 2013 3:53PM
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FED gives free money to banks, hedge funds, financial institutions...they PUMP market up, then get pundits (like Patrick Proctor) to entice you to buy only to watch them turn around and sell by days end leaving your Chumped azz twisting in the wind...house wins again...happens in Vegas all the time.
Jul 18, 2013 4:45PM
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And Detroit files bankruptcy....Just shows the Dow doesn't mean the economy is good.
Jul 18, 2013 5:10PM
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Okay:  " Bernanke stressed that decisions for the Fed to trim stimulus efforts will hinge on U.S. economic growth." Since we know that continuing to "print' $83 billion per month has devalued the dollar by 50% we have to stop "printing."  The easiest way = artificially create numbers that look as if the economy is improving.  Problem solved ...correct?  That is correct, isn't it?

Jul 18, 2013 4:39PM
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They should start the Detroit Stock Exchange--It would be worth as much as Wall street is.
Jul 18, 2013 5:32PM
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Why does Charley and the others insist on making up causes and effects for market moves?  Is it just to fill space or make themselves seem relevant?  The weekly jobless claims had NOTHING to do with today's rally.

Banks are making huge profits from their trading divisions and it's not a surprise.  Take free money from the Fed, use it to buy stocks thereby creating artificial demand for equities which drives the prices up.  Sell in the black, pay back the Fed and pocket the rest.  Rinse and repeat.  This plan is foolproof and works every time, until it doesn't.  God help us all when that happens.

Jul 18, 2013 4:12PM
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No mr Proctor it's fueled by fed money. This is the phoniest market I can remember [ actually the only time] and I have watched the markets for years longer than most of you all. When this administration goes [ and some doubt they will] the whole fiscal picture of America will be to muddied, no one will be able to figure it out. people NEED to go to jail, but where to start.
Jul 18, 2013 4:41PM
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How can anyone claim this is the phoniest markets ever when just a few years ago, the Markets were fueled by the biggest Financial Scam in Modern History, the Scam Derivatives cooked up by Big Banks and praised you guessed it, by the Global FEDS. 500-700 Trillion in bogus mathematical derivatives compared to the 3-4 Trillion pumped in by the FED.

How can anyone claim Crude Oil Manipulators are expecting a rise in gasoline Demand when the actual trend has continued downward due to both the slow economy and better gas mileage from autos. Crude Oil Manipulators are expecting continued Naivety about why crude and therefore gas prices rise.

Jul 18, 2013 4:01PM
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like the government, you can't believe a word they say.
Jul 18, 2013 5:39PM
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Maybe...just maybe the $85 BILLION the feds are pumping into the market monthly is what is causing the dow to continually move upward.  (When the feds quit pumping in the cash the market will fall like a sack of rocks)
Jul 18, 2013 4:56PM
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I was going to remind everyone that in order to secure power, after being voted into office, Adolf Hitler established a national police force which derived its authority from the federal government level, not the state or local government. Fast forward to 2009, Obama calls for the establishment of a national police force - “a civilian police to match the size and power of our armed forces”. Under the authority of the TSA and the Department of Homeland Security, Obama has established such a police force. Still think we live in a free society?

The question is why establish a national police force?  The Federal Reserve Act of 1913 established a policy for a centralized bank that would be called the Federal Reserve Bank, the bank in fact is not a "Federal Bank" but a private bank given the power to regulate the money supply in the US (controlling the nation's money supply). There is no doubt that failed central banking monetary policy was behind the Great Depression. The Federal Reserve, kept interest rates artificially low and  printed too much money, and this money created first a tremendous boom and then a bust (the great depression). Obama and the Federal Reserve is setting the stage for the same, and under the guise of "preventing panic" would attempt to suspend Constitutional Rights and establish Martial Law using the DHS and TSA.

Like I said, I was going to warn people about this but the sheep are already being lead around by Obama. - "It's like deja-vu, all over again" Yogi Berra

Jul 18, 2013 5:56PM
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Yeah, all Indices' numbers are fixed and reported fraudulently..

Wall Street is a COMPLETE HOAX...sweet geezus.

Jul 18, 2013 5:40PM
Jul 18, 2013 5:53PM
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Tojo68

 

Oh, the economy is strengthening, really? That's why the only jobs college graduates [even those with degrees that actually mean something] are having a hard time finding a job? If the best thing that a decently educated person can find is McDonald's or waiting on tables, then THERE IS SOMETHING WRONG with the economy. Detroit is ONLY the first of major cites, towns, counties and states, going into or are going to go into bankruptcy. These other cities and towns HAVE to STOP paying out more money than they are bringing in . If they DON'T, THEY ARE GOING TO GO INTO BANKRUPTCY. NO way around it.

Jul 18, 2013 5:51PM
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Bubble bubble, toil and trouble.  Get your money out now! 
Jul 18, 2013 5:55PM
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njc17

 

Start from the top and work your way down; THAT might get the rats scurrying from their holes

Jul 18, 2013 3:17PM
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I'm first? Either way, ignore the damn markets and just hire/buy! The economy is fueled by us and us alone.

Jul 18, 2013 4:52PM
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Regardless of what happens the market is the place to be. Many come and go but the ones that stay the course do okay and their investments hold their value over time, unlike the US dollar that over time is worth less and may be worthless at some point. So invest in good funds (equity-income or growth-income) stay the course and reinvesting earnings and buying say 10 or 15% of earnings over your working life and when you get old you will be set. You may hear from time to time that buy and hold is old fashion and not applicable today but it is safe and will be the for you over time.
Jul 18, 2013 6:21PM
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hmmm interesting?? should be called the 'temp' jobs report, if all is sooooo well and dandy would anyone mind explaining

 

A: why is the true unemployment at 14% easy U6 the TRUE unemployment number not the fictional     ones created by the insane inane lunatic obama regime

 

B: why the black unemployment is STRATOSPHERIC worse than in the '50's hmmm??

 

the jobs' report is sooo hehe, heheh hahahah!! good! oh I can't say it with a straight face hehe, it's soo good then the black unemployment rate should be way down, as is all the other rates, no?? hmmmm

 

wonder what's wrong with this picture....oh yes!!! yes!!!! end of stimuli = end of the bullshyt obama and his cronies are shoveling!! got it, got it!!!

 

oh and what's this?? whats' THIS!!!! gasoline premium here in Brookyn, NY was $4.04 now overnight it's $4.17!!!! what's up with that??!! oh right, the economy is improving, nevermind..

 

Detroit becomes largest US city to file for bankruptcy hahahah!!! hahaha!! ah!! ahahahahahaha!!!

 

oh man, that's a good one!! because I SAW THAT ONE COMING!! ahahahahah!!!!! the economy is improving!! ah!! hahahaha!! hahaha!!! hahah!!! bail outs anyone?? HEHEHEHHAHAHAHAH!!!HAHAHAH!!!

Jul 18, 2013 7:15PM
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We really aren't Old Rome, but we still have plenty of problems..

Probably the biggest problem in 'Rome was the do nothings..

Then corruption and conniving...I guess maybe we should change our ways.

Maybe why Italy and Greece were/are part of the pi-IG-s Countries..

 

Sad about Detroit a once very vibrant city, parts still are...

People or many, might want to "blame the unions"...NOT TRUE.

Detroit's Government has been corrupt, even criminally corrupt for over 2 decades..

And any city losing 2/3 rds of it's population in about same time frame, can't support what's left with no tax dollars...Much of it was "white flight" and happens all too often.

Jul 18, 2013 5:53PM
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why is it if u drop a pin one way or another they go crazy ? stocks all time high ...  stocks plummet from weak economy !!! they are like women drama queens !!!
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