Created on Thursday, 18 July 2013 Written by STEVE ROTHWELL,AP Markets Writer
NEW YORK (AP) — Earnings gains at major U.S. companies and encouraging economic news pushed U.S. stocks back to record levels Thursday.
A drop in claims for unemployment benefits signaled a healthier economy and encouraged investors to buy stocks. Separately, the Federal Reserve Bank of Philadelphia said manufacturing activity in the mid-Atlantic region grew in July at the fastest pace in more than two years.
Among companies reporting second-quarter earnings, Morgan Stanley was one of the standouts, rising $1.19, or 4.5 percent, to $27.72. The New York bank reported sharply higher earnings driven by investment banking gains. IBM rose $5, or 2.6 percent, to $199.50 after its profit beat analysts' forecasts as software sales grew.
Investors also kept an eye out for comments from Fed chairman Ben Bernanke, who is delivering his semiannual economic report to Congress. Bernanke is appearing before the Senate Banking Committee and repeating testimony he gave to the House Financial Services Committee Wednesday.
Bernanke gave stocks a lift on Wednesday when he said that there was no "preset course" for ending the Fed's $85 billion-a-month bond-buying program and that any change would depend on how well the economy is doing. Investors have worried that the central bank might reduce its stimulus before the economy was strong enough.
"The economic data continues to be solid and there's less concern that the Fed is going to take away the punch bowl before the economy is healthy enough to handle it," said Alec Young, a global equity strategist at S&P Capital IQ. "On balance, earnings aren't great but they're coming in ahead of expectations."
The Dow Jones industrial average rose 82 points, or 0.5 percent, to 15,552 as of 1 p.m. Eastern Daylight Time. The Dow's gains were led by IBM and UnitedHealth Group, which reported higher earnings.
The Standard & Poor's 500 index climbed seven points, or 0.5 percent, to 1,688.
The Nasdaq composite rose was up less than a point at 3,610. The Nasdaq was held back by weak earnings reports from several major technology companies.
eBay fell $3.80, or 6.6 percent, to $53.58 after its CEO John Donahoe said late Wednesday that economic weakness in Europe and Korea will "continue to be a challenge" in the second half of the year.
Intel fell 83 cents, or 3.5 percent, to $23.32 after the world's largest maker of computer chips predicted flat sales amid a decline in PC sales. The company's earnings and revenue fell in the second quarter.
The weak results are in line with what's expected to be a weak second-quarter earnings season for the U.S. technology industry. Profit growth is expected to contract from a year ago.
Companies in the S&P 500 are expected to report profit growth of 3.7 percent for the quarter. The earnings so far have helped the stock market resume its upward march in July. Stocks pulled back in June amid concerns that the Fed was poised to cut its stimulus. The S&P 500 has gained 4.5 percent this month and is up 18.7 percent for the year.
In government bond trading, the yield on the 10-year note edged up to 2.53 percent from 2.49 percent late Wednesday.
In commodities trading, the price of oil rose $1.29, or 1.2 percent, to $107.78 a barrel. The price of gold gained $5.70, or 0.5 percent, to $1,283.20 an ounce.
The dollar rose against the euro and the Japanese yen.
Among other stocks making big moves.
— UnitedHealth Group, the nation's largest health insurer, surged $3.85, or 6.8 percent, to $70.12 after reporting earnings that beat analysts' estimates.
— Johnson Controls, which makes heating and ventilation systems for buildings, surged $2.61, or 7 percent, to $39.95 after the company said its fiscal third-quarter net income climbed 33 percent as revenue improved. The earnings beat Wall Street's expectations, and the company provided a fourth-quarter earnings forecast above analysts' estimates.