Investors who had tempered their expectations for first-quarter earnings on Monday were energized by the initial wave of upbeat results. So far into the earnings season, 16 of the 30 Dow components have posted financial results for the first three months of the year - with 10 surpassing analyst forecasts. Dow components Honeywell International Inc., Caterpillar Inc., Pfizer Inc., and McDonald's Corp. all reported earnings Friday.
Better-than-expected results allowed stocks to extend their best April rally in four years, and one that pushed the Nasdaq composite index and the Standard & Poor's 500 index to six-year highs.
"It's not a matter of 13,000 for the Dow, we could be looking at 14,000 by the end of the year," said Robert Froehlich, chief investment strategist for investment firm DWS Scudder. "There's too much money out there chasing too few companies. This story isn't ending anytime soon."
The Dow closed up 153.35, or 1.20 percent, at 12,961.98, after setting a new intraday high of 12,966.29. The blue chip index - now about 38 points shy of 13,000 - has hit 34 record closes since the beginning of October last year.
The S&P 500 index soared 13.62, or 0.93 percent, to 1,484.35, and the Nasdaq rose 21.04, or 0.84 percent, to 2,526.39. The Nasdaq, badly beaten down since its peak of 5,048.62 in early 2000, now stands at just over 50 percent of that record. For the week, the Dow surged 2.8 percent, the S&P 500 added 2.2 percent, and the Nasdaq rose 1.4 percent. Advancing issues outnumbered decliners by more than 3 to 1 on the New York Stock Exchange, where consolidated volume came to 3.29 billion shares, compared to 2.94 billion on Thursday. Bonds held steady as many investors focused on stocks. The yield on the benchmark 10-year Treasury note was unchanged at 4.67 percent. The dollar was mostly lower against other major currencies, while gold prices spiked. Oil prices rose ahead of the presidential election in Nigeria, which is Africa's top producer of crude. A barrel of light sweet crude rose $1.55 to settle at $63.38 on the New York Mercantile Exchange. Friday's advance brought fresh highs for several market indexes, indicating that the advance was more broad-based than simply a strong showing by the Dow industrials. Among the indexes setting records, the Dow Jones transportation average closed at a record level, as did the Dow Jones utilities average. The Wilshire 5000 composite index, a free-float weighted index that measures 5,000 U.S. based companies, closed above 15,000 for the first time Friday. The Russell 3000 index, which represents about 98 percent of the U.S. market, on Friday registered its fourth record close for the week. Wall Street's advance signaled its recovery from the Feb. 27 worldwide plunge in stocks that sliced 416 points from the Dow. On Wednesday, the blue chips set their first new closing and intraday highs since Feb. 20. The February skid was caused in part by concerns that China's economic growth might be curbed; the Shanghai stock market led the rest of the world lower. This week, Chinese stocks seesawed amid continuing concerns, but Wall Street suffered little damage. The abundance of relatively benign U.S. economic data released this week contributed to investors' buying mood. New data indicated that builders picked up the pace of construction of new homes last month, and that there was a modest increase in core inflation. Federal Reserve Governor Frederic Mishkin said in a speech Friday it might take a couple of years for inflation to ease toward levels that the Fed is comfortable with, which could mean that the central bank won't be cutting rates anytime soon. Either way, Wall Street theorized this week that central bankers did not see enough evidence in recent reports to force a policy change. And that set up earnings to be a key catalyst for stocks. "The main impetus has been, most of the bears and the gloom-and-doomers thought that first-quarter earnings would stink. Once again, the gloomy Guses have been proven wrong," said Alfred E. Goldman, chief market strategist at A.G. Edwards & Sons Inc. in St. Louis. Google gave a boost to technology stocks after it reported late Thursday a 69 percent jump in first-quarter profit to exceed analyst expectations. The results helped reassure some investors who had grown cautious about tech growth, and sent Google up $10.83, or 2.3 percent, to $482.48. Caterpillar was the Dow's biggest mover after the manufacturer of heavy equipment posted better-than-expected quarterly profit and issued robust profit guidance. Shares rose $3.20, or 4.7 percent, to $71.82. Honeywell International rose $2.34, or 4.8 percent, to $51.40 after the industrial conglomerate topped Wall Street projections. McDonald's reported quarterly profit rose 22 percent, but its shares dipped 42 cents to $48.36. Pfizer reported one-time charges that pushed profit lower by 18 percent, but the results beat expectations. The stock fell 10 cents to $26.97. American Express Co. rose $2.05, or 3.5 percent, to $61.00 after first-quarter profit toppled Wall Street expectations. The nation's third-largest credit card brand said the period was driven by higher spending and more cards issued. In acquisition news, H&R Block Inc. said it will sell its troubled Option One Mortgage Corp. to an affiliate of Cerberus Capital Management LP. Shares of the tax preparer rose 73 cents, or 3.3 percent, to $22.56. Clear Channel Communications Inc. fell 21 cents to $35.75 after it announced the sale of its television group to a private equity firm for about $1.2 billion. The Russell 2000 index of smaller companies was up 9.54, or 1.16 percent, at 828.86. Overseas, Japan's Nikkei stock average closed up 0.42 percent. Britain's FTSE 100 was up 0.72 percent, Germany's DAX index rose 1.38 percent, and France's CAC-40 advanced 1.88 percent. (AP) The Dow Jones industrial average ended the week rose 349.85, or 2.77 percent, at 12,961.98. The Standard & Poor's 500 index rose 31.50, or 2.17 percent, at 1,484.35. The Nasdaq composite index rose 21.04, or 0.84 percent, to 2,526.39. The Russell 2000 index closed the week up 7.74, or 0.94 percent, at 828.86. The Dow Jones Wilshire 5000 Composite Index - a free-float weighted index that measures 5,000 U.S. based companies- ended the week at 15,009.91, up 273.47 points from last week. A year ago, the index was at 13,315.83. --- On the Net: New York Stock Exchange: http://www.nyse.com Nasdaq Stock Market: http://www.nasdaq.com AP-CS-04-20-07 1754EDT