* Morgan Stanley surges over 4 pct after results
* Shares of eBay, Intel fall after disappointing forecasts
* Bernanke continues congressional testimony
* Dow up 0.6 pct, S&P 500 up 0.5 pct, Nasdaq up 0.1 pct
By Chuck Mikolajczak
NEW YORK, July 18 The Dow and the S&P 500
climbed to record intraday highs on Thursday, buoyed by a batch
of better-than-expected earnings, as congressional testimony by
Federal Reserve Chairman Ben Bernanke continued into its second
Shares of Morgan Stanley jumped 4.8 percent to $27.80
after the bank posted a 42 percent increase in quarterly profit
as stock trading revenue soared. The S&P financial index
climbed 1.1 percent.
A jump in shares of UnitedHealth helped lift the Dow
and other health insurers. UnitedHealth gained 5.6 percent to
$69.93 after the company's results beat expectations, while the
Morgan Stanley healthcare payor index rose 2.9 percent.
Analysts' estimates for corporate earnings have been lowered
so much that investors believe the low targets should be easily
exceeded. Instead, investors will likely hone in on revenue
figures and outlooks.
"Corporate America has gotten very good at setting the bar
at a level where they can glide over it every quarter, and Wall
Street continues to fall for it. So why ruin a good plan?" said
Stephen Massocca, managing director at Wedbush Equity Management
LLC in San Francisco.
IBM raised its full-year outlook and reported
earnings that beat estimates, though the company missed
forecasts on revenue. Shares of International Business Machines
rose 2.3 percent to $198.99. IBM provided the top boost to the
Dow and helped offset a 3.9 percent drop in Intel to
$23.19 after the world's biggest chipmaker cut its full-year
Analysts expect S&P 500 companies' second-quarter earnings
to have grown 3.5 percent from a year earlier, with revenue up
1.1 percent, according to Thomson Reuters data.
Of the 81 companies in the S&P 500 that have reported
earnings through Thursday so far, 70.4 percent have reported
earnings above analysts' expectations, while revenue has topped
estimates at a 49.4 percent rate.
The Dow Jones industrial average gained 98.03 points,
or 0.63 percent, to 15,568.55. The Standard & Poor's 500 Index
gained 8.82 points, or 0.52 percent, to 1,689.73. The
Nasdaq Composite Index gained 2.20 points, or 0.06
percent, to 3,612.20.
Both the Dow and the S&P 500 hit new intraday highs shortly
after the opening bell. The Dow climbed as high as 15,589.40,
while the S&P 500 touched a session high of 1,693.12.
Aside from Intel, the Nasdaq's gains were capped by eBay
. The e-commerce company's stock slumped 6.4 percent to
$53.74 after eBay said full-year results would be at the low end
of its forecast range.
A meeting of Dell shareholders to vote on founder
Michael Dell's $24.4 billion offer to take the company private
was adjourned to next week. Dell's stock rose 2.3 percent to
With the benchmark S&P 500 up nearly 18 percent for the
year, investors are alert to any signs of how soon the Federal
Reserve will start to wind down the pace of its $85 billion a
month in bond purchases, a major driver of the U.S. stock
market's rally this year.
Speaking before the House Financial Services Committee on
Wednesday, Bernanke stressed that the timeline for winding down
the Fed's stimulus program was not set in stone. As the chairman
continued his testimony on Thursday before the Senate Banking
Committee, he said economic data since the Fed's June meeting
has been mixed. But it's too early to make a judgment on the
impact for the central bank's forecasts, he added.
"He's done a good job of navigating the waters," Massocca
said. "He's got people calmed down about interest rates, but on
the other hand, the economy seems to be doing OK."