Wall Street extended Wednesday's Fed-inspired rally, as consumer spending rose and Exxon Mobil posted record profits
Stocks finished higher Thursday, and the Dow hit a second straight all-time closing high, as mostly solid economic and earnings news helped counter disappointment over Google's (GOOG) quarterly results. The market also likely benefited from carry-over buying after Wednesday's rally, says Standard & Poor's Equity Research.
On Thursday, the Dow Jones industrial average rose 51.99 points, or 0.41%, to 12,673.68, above the previous closing record set Wednesday. The broader Standard & Poor's 500 index added 7.7 points, or 0.54%, to 1,445.94. The tech-heavy Nasdaq composite was up 4.45 points, or 0.18%, to 2,468.38.
NYSE breadth was decidedly positive, with 25 issues advancing for every 9 declining. Nasdaq breadth was 20-11 positive.
The upbeat Federal Reserve statement Wednesday cheered investors' spirits, but earnings trends and technical indicators continue to indicate possible trouble for the S&P 500 and Nasdaq, some analysts say. "Yesterday's Fed news certainly got everyone in a buying mood, but when you look at the fundamentals of what's been going on in the market, I'm kind of disappointed in the rally that we've had," says Chris Johnson, CEO and chief investment strategist of Johnson Research Group. "I don't think we're out of the woods yet."
In economic news Thursday, U.S. personal income rose 0.5% and spending added 0.7% in December, after an unrevised 0.3% income gain and 0.5% spending rise in November. The core PCE deflator, a key inflation gauge, rose 0.1%, from a flat reading in November.
"These numbers are somewhat anticlimactic after yesterday's quarterly data, but are also more of the same Goldilocks scenario, with solid economic growth and tame inflation," says Action Economics.
Looking ahead, a report on January nonfarm payrolls highlights the docket Friday. Investors will also be assessing data on factory orders and consumer sentiment.
In other economic releases Thursday, the Institute for Supply Management's index of manufacturing activity fell to 49.3 in January, much weaker than expected, from 51.4 in December.
The National Assn. of Realtors' pending home sales index climbed 4.9% to 112.4 in December, above expectations.
U.S. jobless claims fell 20,000 to 307,000 in the week ended Jan. 27, after jumping to an upwardly revised 327,000 the previous week.
Among stocks in the news, Dell (DELL) was lower after the computer maker said founder Michael Dell was replacing Kevin Rollins as chief executive officer.
On the earnings front, Internet search company Google was lower despite topping analyst estimates with fourth-quarter earnings of $1.03 billion.
Exxon Mobil (XOM) was higher after the oil giant reported a 4% decline in fourth-quarter net income amid a record $39.5 billion annual profit. Rival Chevron (CVX) was slated to post earnings Friday.
Starbucks (SBUX) was down after the coffee seller posted an 18% jump in profit for its fiscal first quarter.
Corn-processor Archer Daniels Midland (ADM) was sharply higher on a 20% gain in earnings for its fiscal second quarter.
On the downside, shares of Comcast (CMCSA) dipped as the cable operator's fourth-quarter profit fell short of analyst estimates.
Boston Scientific (BSX) was lower after the medical device maker said its fourth-quarter earnings fell 17%.
Companies set to announce quarterly results later Thursday include Amazon (AMZN) and Electronic Arts (ERTS).
Elsewhere Thursday, automakers were reporting January unit vehicle sales. General Motors (GM) logged a much weaker than expected 17% decline from a year earlier, while Ford's (F) 20% drop in sales was line with expectations. DaimlerChrysler (DCX) posted a 3% gain from a year earlier, stronger than expected.
In addition, Toyota (TM) narrowly missed expectations with a 10% year-over-year sales increase. Honda (HMC) posted a stronger-than-forecast 2% uptick. Overall January auto sales are pegged at 16.5 million, says Action Economics.
In M&A news, insurer Marsh McLennan (MMC) said it was selling Putnam Investments to Great-West Lifeco for $3.9 billion in cash.
Bank of America (BAC) CEO Kenneth Lewis said it's unlikely the banking giant will pursue an acquisition of a smaller rival in 2007, scuttling rumors the company was in buyout talks with Countrywide Financial (CFC).
In the energy markets, March West Texas Intermediate crude oil futures fell 84 cents to $57.30 a barrel in a see-saw session following Wednesday's surge.
European markets finished higher. The FTSE-100 index in London rose 79.1 points, or 1.28%, to 6,282.2. Germany's DAX index added 62.17 points, or 0.92%, to 6,851.28. In Paris, the CAC 40 index was up 53.94 points, or 0.96%, to 5,662.25.
Asian markets ended higher. In Japan, the Nikkei 225 index gained 136.08 points, or 0.78%, to 17,519.5. In Hong Kong, the Hang Seng index climbed 323.74 points, or 1.61%, to 20,430.16. Korea's Kospi index advanced 22.67 points, or 1.67%, to 1,382.9.
Treasury yields ticked higher as the jump in pending home sales offset the mild PCE increase, soft ISM reading, and sharp drop in jobless claims. The 10-year note fell in price to 98-12/32 for a yield of 4.83%, while the 30-year bond dropped to 93-13/32 for a yield of 4.93%.