Markets Have Best Week in 2 Years

By THE ASSOCIATED PRESS OCT. 24, 2014




The stock market closed out its best week in nearly two years on a positive note Friday, helped by strong quarterly earnings from Microsoft and other big companies.

After weeks of speculation over the fate of Europe’s economy, Ebola fears and plunging oil prices, investors appeared to get back to basics.

Wall Street is in the middle of one of the busiest times of the year — when companies report their quarterly results. What drives stock prices higher is the potential for a company to earn more, so higher profits generally mean higher stock prices.

“What matters most to the market are earnings expectations and corporate fundamentals, and so far they’re looking pretty good,” said Michael Arone, chief investment strategist at State Street Global Advisors.

Profits for companies in the Standard & Poor’s 500-stock index are up 5.6 percent from a year ago this earnings season, according to FactSet. That growth is better than the 4.6 percent increase the market was expecting.

Quarterly results from Microsoft and UPS helped lift stocks Friday, but there have been other strong reports this week. Caterpillar, 3M and Apple have come in well above expectations.

Microsoft’s sales and profits were also well above analysts’ forecasts. Cloud services, a business the company has focused on, also grew. Microsoft rose $1.11, or 2.5 percent, to $46.13.

UPS also reported strong results and expected December shipments to rise 11 percent from a year ago. Many investors consider UPS a bellwether for the health of the economy, particularly during the crucial holiday shopping season. UPS rose 11 cents, or 0.1 percent, to $100.59.

Investors were even able to set aside the dismal third-quarter results from Amazon, which reported a steeper-than-expected quarterly loss despite soaring sales. The company has been unable to deliver profits even as it gains ground as one of the world’s largest retail companies.

Amazon fell $26.12, or 8 percent, to $287.06.

The Dow Jones industrial average rose 127.51 points, or 0.8 percent, to 16,805.41. The S.&P. 500 added 13.76 points, or 0.7 percent, to 1,964.58. The Nasdaq rose 30.92 points, or 0.7 percent, to 4,483.72.
The S.&P. 500 rose 4.1 percent for the week, its biggest gain since January 2013. But volatility can go both ways. The market plunged just as sharply last week as it rose this week. The index is still down 0.4 percent for October.

“We’ve seen the market sell off and we saw people buy on the bounce, and that looks like it will continue,” said Brad McMillan, chief investment officer at Commonwealth Financial.

Investors are turning their focus to next week’s Federal Reserve policy meeting for hints about the future of the central bank’s bond purchases and its short-term interest rates.

The bond-buying program has kept long-term rates extremely low to encourage investment and hiring. Recent mixed signals about the strength of the recovery have prompted speculation that the Fed might let the program continue for longer than previously anticipated.

The price of the 10-year Treasury note rose 1/32 to 100 29/32, and its yield fell to 2.27 percent from 2.28 percent Thursday.

Investors will also get more quarterly results from American companies next week, when 159 members of the S.&P. 500 report. Those companies include Merck, Exxon Mobil, Chevron and Visa.

The price of oil fell Friday on further evidence of ample supplies and weak demand. Benchmark United States crude fell $1.08 to close at $81.01 a barrel in New York. Brent crude, a benchmark for international oils used by many United States refineries, fell 70 cents to close at $86.13 in London.

http://www.nytimes.com/2014/10/25/bu...-activity.html