US STOCKS-Wall St rebounds after sharp drop; tech shares rally

Fri Jul 18, 2014 2:46pm EDT

* GE, IBM shares slip after earnings

* Obama condemns Russia after Malaysian airliner downed in Ukraine

* Dow up 0.7 pct; S&P 500 up 1 pct; Nasdaq up 1.5 pct (Updates to afternoon)

By Angela Moon

NEW YORK, July 18 (Reuters) - U.S. stocks rose on Friday, rebounding a day after the S&P 500 suffered its worst decline since April 10, with the benchmark index on track to post a modest gain for the week.

Technology and consumer finance stocks ranked among the day's biggest gainers. At the top of the pack, shares of Google jumped 4.1 percent to $604.62 a day after the company reported second-quarter results that beat investors' expectations. Facebook Inc shares gained 2.6 percent to $68.15.

Market participants kept a close watch on geopolitical news. U.S. President Barack Obama demanded that Russia stop supporting separatists in eastern Ukraine after the downing of a Malaysian airline by a surface-to-air missile he said was fired from rebel territory raised the prospect of more sanctions on Moscow.

Investors also remained wary after Israel stepped up its land offensive in Gaza on Friday.

"As a market participant, what's more concerning to me are the latest round of U.S. sanctions on Russia. If the EU follows the U.S. and ratchets up pressure on Russia, what will happen to bonds of Russian companies such as Gazprom and Rosneft?" said Putri Pascualy, credit strategist and portfolio manager at Pacific Alternative Asset Management Co. in Irvine, California.

The Dow Jones industrial average rose 117.29 points or 0.69 percent, to 17,094.10. The S&P 500 gained 18.91 points or 0.97 percent, to 1,977.03. The Nasdaq Composite added 64.27 points or 1.47 percent, to 4,427.72.

For the week, the Dow is up 0.9 percent, the S&P 500 is up 0.5 percent, and the Nasdaq is up 0.3 percent.

The CBOE Volatility Index plunged 16.4 percent to 12.16 - a day after surging 32 percent to 14.54, which was its biggest jump since April 2013. The VIX still remains well below its historical average of around 20.

General Electric shares shed 0.9 percent to $26.37 after the U.S. conglomerate reported growth in second-quarter operating earnings that matched analysts' expectations.

Fellow Dow component International Business Machines Corp slightly lost ground, down 0.1 percent at $192.32, a day after the world's largest technology company reported its software business grew less than expected even as quarterly earnings beat analysts' expectations.

But Honeywell International, a maker of aircraft cockpit parts and other electronic equipment, raised the lower end of its 2014 profit forecast range and reported better-than-expected quarterly profit. Its stock gained 1.6 percent to $96.73.

S&P 500 companies' profits are expected to grow 5 percent in the second quarter, according to Thomson Reuters data, down from the 8.4 percent growth forecast at the start of April. Revenue is seen up 3.2 percent.

Thomson Reuters data also showed that of 82 companies in the S&P 500 that had reported earnings through Friday morning, 68.3 percent beat Wall Street's expectations, roughly in line with the 67 percent rate for the past four quarters and above the 63 percent rate since 1994. (Reporting by Angela Moon; Editing by Jan Paschal)