Strong earnings drive stocks higher on Wall Street

4/23/2013

NEW YORK — Strong earnings across a range of U.S. industries pushed the stock market higher today.

Makers of handbags, jet planes and chemical products all turned in good results for the first quarter, reviving investors’ confidence after a sharp downturn in the stock market last week.

Coach, Lockheed Martin, DuPont and Travelers were among the winners after they reported results that were better than analysts expected. The Dow Jones industrial average and the Standard & Poor’s 500 index both rose nearly 1 percent in morning trading, putting them on track for a third straight day of gains.

A resurgence in corporate profits after the Great Recession has been one of the drivers that pushed both the Dow Jones industrial average and the Standard & Poor’s 500 index to record levels this year. However investors are starting to question how much further company earnings can improve without the outlook for growth in the global economy improving as well.

Today's upturn in stocks put both indexes back in the black for April and closer to the record high closes they reached on April 11. It was a sharp change of tone from last week, when the market had its worst drop since November. That sell-off started after economic growth in China, the world’s second-largest economy, slowed.

So far, about 70 percent of the companies that reported earnings for the first quarter have beaten analysts’ expectations, better than the 10-year average of 62 percent, according to data from S&P Capital IQ. Analysts currently expect earnings to rise by 2.1 percent in the first quarter, compared with 7.7 percent growth in the previous three-month period.

Netflix soared 25 percent to $219 after reporting a big gain in subscribers in the first quarter late yesterday. Coach, which makes Luxury handbags and other accessories, soared 11 percent to $56.44. Lockheed rose 2 percent to $97.25. DuPont and Travelers each rose 3 percent, to $51.88 and $86.88.

The Dow was up 146 points at 14,714 as of 12:25 p.m. The S&P 500 was 17 points higher at 1,579. Both indexes are 1 percent below their record high closes from nearly two weeks ago.

The Nasdaq composite rose 41 points to 3,274.

Apple, the biggest component in the index, reports earnings after the market closes. Apple has lost 23 percent of its value this year. Investor worry that demand for the iPhone is waning as competitors like Samsung sell more smartphones. The company’s stock rose $7.82 to $407.