Created on Friday, 25 October 2013 Written by BERNARD CONDON, AP Business Writer
NEW YORK (AP) — Strong earnings from technology companies are pushing the stock market slightly higher Friday.
Microsoft drove the Dow Jones industrial average up after reporting solid sales of tablet computers.
The Dow was up 24 points, or 0.2 percent, at 15,534 as of 12:45 p.m. Eastern Daylight Time. The Standard & Poor's 500 index was up two points, or 0.1 percent, at 1,754, matching its record close on Tuesday. The Nasdaq composite rose three points, or 0.1 percent, to 3,932.
The Dow and the S&P 500 are heading for their third straight week of gains, leading some market watchers to think stocks are starting to look expensive.
"The question is: What is the outlook for earnings?" Steven Ricchiuto, chief economist at Mizuho Securities, said. "There is only so much you can do with cost-cutting."
The three major indexes are up more than 18 percent since the start of the year as a slowly recovering U.S. economy, higher corporate earnings and continued economic stimulus from the Federal Reserve encourage investors to keep buying. The tech-heavy Nasdaq is at a 13-year high.
The partial government shutdown earlier this month slowed the economy but also gave money managers reason to keep bidding up stocks. Many had expected the Fed to pull back from its stimulus policy before the end of year, but now think the central bank will hold off until next year, possibly until March. The Fed is buying $85 billion worth of U.S. government and other bonds with the aim of keeping interest rates low.
The yield on the 10-year Treasury note, a benchmark for mortgages and many other kinds of loans, edged down to 2.51 percent from 2.52 percent. The yield has fallen sharply since Sept. 5, when it hit 3 percent, and is the lowest it's been in three months.
Most companies that have reported third-quarter earnings are beating analysts' estimates. Still, earnings for the S&P 500 are expected to grow just 4.5 percent over the same period a year ago, according to S&P Capital IQ, a research firm. At the start of the year, earnings were expected to rise at more than twice that pace.
Seven of the 10 industry groups in the S&P 500 were higher. Telecommunications stocks rose the most, 0.9 percent.
Microsoft beat analysts' forecasts for revenue and earnings, giving hope to investors that its shift to devices and services from PC-based software will be successful. The company rose $1.85 to $35.57, a gain of 5 percent, after reporting a 17 percent increase in third quarter net income late Thursday.
Amazon.com was up $28.30, or 9 percent, to $361 as investors continue to shrug off its losses. The online retailer reported that revenue rose 24 percent to $13.8 billion in the third quarter, more than financial analysts had expected.
Zynga surged 12 percent after the Internet gaming company reported it had cut losses in the third quarter. The maker of "Farmville" and "Mafia Wars" is trying to appeal more to users of smartphones and tablet computers under a new CEO.