Microsoft leads market rally
Investors sent stocks soaring today on weak earnings reports that provided just enough hope that a business turnaround will come sooner rather than later.
The rally, sparked by an upbeat revenue forecast from Microsoft, allowed Wall Street to build on momentum from earnings reports from Yahoo! and Motorola that were lacklustre but better than expected.
The Dow Jones industrial average soared 237.97 to 10,478.99, the Nasdaq composite index was up 103.70 at 2,075.74 and the Standard & Poor's 500 index rose 27.96 to 1,208.14.
Microsoft led the rally, rising $5.10 to $71.60 after the software maker said its fiscal fourth-quarter revenue would come in above expectations.
Yahoo was up $1.23 at $18.26 after saying late on Wednesday it expected third-quarter results to break even. Motorola, which lowered estimates for the next two quarters Thursday, gained $2.48 to $18.15.
Investors also rewarded General Electric, sending it up $2.39 to $47. The conglomerate met expectations with second-quarter earnings that rose 15% on strong performances in its financial services and power systems divisions.
The enthusiasm spread to retailers, even those who reported disappointing monthly sales today. Ann Taylor Stores rose $1.38 to $32.78, despite reporting a 12.3% decline in June sales at stores open at least a year. Ann Taylor also lowered its earnings projections for the second quarter.
There was one weak spot: pharmaceuticals, a sector that usually suffers when investors shift money into technology stocks. Schering Plough was off 47 cents at $35.80, while Merck dropped $1.36 to $61.
Now that the Federal Reserve has cut interest rate cuts six times this year, investors are increasingly looking to corporate profitability and performance as the best indicator that the weakened economy is reviving.
Also today, the Labour Department said new claims for state unemployment insurance jumped last week to the highest level in nine years. Analysts attributed some of the increase to temporary shutdowns in the car industry which occur annually as assembly lines are retooled.
