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Date Posted: 03:58:08 07/20/12 Fri
Author: Thursday 19/7/2012==36==American Express
Subject: US Stocks Rise As IBM, Tech Sector Surge; Economic Data Downbeat

US Stocks Rise As IBM, Tech Sector Surge; Economic Data Downbeat
20/07/2012 6:27AM
--Stocks rise on upbeat technology-sector earnings

--IBM gains after second-quarter results, raised outlook; eBay, Qualcomm rally

--Economic data on labor, housing markets disappointing

By Matt Jarzemsky

NEW YORK--Technology shares rallied on better-than-expected earnings reports from International Business Machines and others, overshadowing a disappointing round of economic data to push U.S. stocks higher.

The Dow Jones Industrial Average rose 34.66 points, or 0.27%, to 12943.36, its third-straight daily advance.

The Standard & Poor's 500-stock index added 3.73 points, or 0.27%, to 1376.51. The technology and materials sectors saw the biggest advances among the index's 10 groups. The tech-heavy Nasdaq Composite Index advanced 23.30 points, or 0.79qcom

%, to 2965.90.

"It's an unwinding of the push-down we had in earnings expectations earlier this month," said John Manley, chief equity strategist at Wells Fargo's funds-management unit, which oversees $201 billion in assets. "We came into this period with pretty modest expectations."

IBM's shares gained 3.8%, the sharpest increase since January, after raising its profit forecast for the year. The rally contributed more than 55 points to the price-weighted Dow Jones Industrial Average's move.

Qualcomm rose 4.3% after the semiconductor maker said it was on track to resolve the supply issues that prompted the company to lower revenue forecasts for the current quarter. EBay shot up 8.6% to more than a six-year high after the online auctioneer's second-quarter earnings and revenue exceeded analysts' forecasts.

"The tone of earnings season has been firmer than people thought," said Greg Peterson, director of investment research at Ballentine Partners, which oversees $3.5 billion of assets. "I think they were expecting things to fall off the edge, and they aren't."

Textron climbed 12% after results from the maker of Bell helicopters and Cessna aircraft topped analysts' predictions. Morgan Stanley dropped 5.3% after profit missed forecasts amid weakness in the company's institutional securities business. A downbeat round of economic data kept a lid on the market's gains.

Downbeat economic data kept a lid on the market's gains. The number of Americans filing for jobless benefits rose more than economists expected, the Labor Department reported. Sales of previously occupied homes unexpectedly fell in June, to the lowest level in eight months, according to the National Association of Realtors.

Factory activity in the Mid-Atlantic region contracted, albeit at a slower pace, for a third straight month in July, according to the Federal Reserve Bank of Philadelphia's index of manufacturing activity. The Conference Board's leading economic index fell further than forecast.

"You've got the economic data that has offset good earnings reports. I think there's enough out there to have some guys take some profits, but this market has been pretty resilient," said Rick Bensignor, chief market strategist at Merlin Securities.

European markets were broadly higher, with the Stoxx Europe 600 rising 1.1% as strong earnings and Germany's approval of the aid plan for Spanish banks buoyed sentiment. Among European companies that reported better-than-expected results were Novartis, Akzo Nobel and Electrolux.

Asian markets rallied on the back of strength in the U.S. and in resource stocks, which were boosted by continued gains in oil prices. China's Shanghai Composite rose 0.7%, Australia's S&P ASX 200 ran up 2%, and Japan's Nikkei Stock Average advanced 0.8%.

Crude-oil futures rose 3.1% to settle at $92.66. Gold futures gained 0.6% to finish at $1,580.10. The dollar moved higher against the euro but fell versus the yen.

In other corporate news, Walgreen jumped 12%, leading the S&P 500 higher, after ending a seven-month dispute with pharmacy-benefits manager Express Scripts that had prevented millions of patients from getting prescriptions filled at the drugstore chain.

PPG Industries advanced 7.5% after saying it will split off its chemicals business and combine the new company with smaller rival Georgia Gulf in a cash-and-stock deal. Georgia Gulf's stock jumped 13%.

Dow component American Express slipped 3.5%. The charge-card company reported second-quarter earnings that topped expectations but revenue that fell a bit shy.

Verizon Communications sank 2.9% after releasing second-quarter earnings that were in line with expectations.

Teen retailer Five Below jumped 56% on its first day of trading, after its initial public offering priced at the high end of a recently boosted expected range. Durata Therapeutics advanced 0.4%. The drug developer sold more shares than it had originally planned in its IPO but at a price below its expected range.

Write to Matt Jarzemsky at matthew.jarzemsky@dowjones.com.

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

(END) Dow Jones Newswires

July 19, 2012 16:27 ET (20:27 GMT)

Copyright (c) 2012 Dow Jones & Company, Inc.

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