Stocks rallied again Thursday, with the Standard & Poor's 500 index approaching its bull market high, as higher-than-estimated earnings at companies from Apple to Morgan Stanley bolstered optimism in the economy.
Technology companies rallied as Apple gained $8.29 to $350.70 and Qualcomm advanced $1.67 to $56.94 after reporting profit and sales that topped estimates. Material stocks including Alcoa, which rose 33 cents to $16.97, led gains as commodity prices increased for the third day in a row. Morgan Stanley added 44 cents $26.48 as the owner of the world's largest brokerage said trading revenue more than doubled from the fourth quarter.
The S&P 500 gained 7.02 points, or 0.5%, to 1337.38. The benchmark gauge for U.S. stocks has risen 1.3 percent over the past four days, ending two consecutive weeks of losses. The Dow Jones industrial average rose 52.45 points, or 0.4 percent, to 12,505.99, its highest close since June 2008. The Nasdaq composite index rose 17.6.5 points, or 0.6 percent, to 2820.16.
"There's no doubt this rally's earnings-driven," says Tom Wirth, senior investment officer for Chemung Canal Trust. "The Dow is at a three-year high because earnings are also at a three-year high. We expect this quarter to be a record quarter. We're seeing the top line pick up. This is a multinational large-company story. It's company after company."
S&P 500 companies have topped analyst estimates for eight quarters in a row, the longest streak since at least 2006, helping propel the gauge up 98 percent from the market bottom on March 9, 2009. The index is about 0.4 percent below 1343.01, the Feb. 18 high for the rally.
David Kostin, chief U.S. equity strategist at Goldman Sachs, says U.S. companies are posting "excellent" earnings and some, such as tech firms, will carry on that momentum throughout 2011. He forecasts the S&P 500 will rise to 1500 by the end of 2011, the second-highest estimate out of 13 strategists surveyed by Bloomberg.
"We are seeing excellent results thus far," he says. "You have an expanding economy, strong earnings growth, and you have positive flows" of money into the market.
U.S. markets are closed today for the Good Friday holiday.
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