* Morgan Stanley's stock soars after strong results
* Shares of eBay, Intel fall after disappointing forecasts
* Bernanke soothes markets again in congressional testimony
* Dow up 0.5 pct, S&P 500 up 0.5 pct, Nasdaq up 0.04 pct
By Caroline Valetkevitch
NEW YORK, July 18 The Dow and the S&P 500 closed
at record highs on Thursday after Morgan Stanley and others
reported better-than-expected earnings and Federal Reserve
Chairman Ben Bernanke's comments further reassured markets.
Shares of Morgan Stanley jumped 4.4 percent to
$27.70, its highest close since April 2011, after the bank
posted a 42 percent increase in quarterly profit as stock
trading revenue soared. The S&P financial index climbed
Of the 21 financial companies that have reported quarterly
earnings so far, 76 percent have surpassed analysts' estimates,
Thomson Reuters data showed.
UnitedHealth shares rallied, buoying the Dow and
other health insurers' stocks. UnitedHealth gained 6.5 percent
to $70.55 after the company's results beat expectations. The
Morgan Stanley healthcare payor index rose 3.1 percent.
Both the Dow and the S&P 500 also hit all-time intraday
highs shortly after the opening bell. The Dow climbed as high as
15,589.40, while the S&P 500 set a record session high of
Bernanke, speaking before the Senate Banking Committee,
reiterated comments he made on Wednesday to the House Financial
Services Committee. He stressed that the timeline for winding
down the Fed's stimulus program was not set in stone.
"We got no negative surprises from the Fed chairman today,
so the market liked that," said Bucky Hellwig, senior vice
president of BB&T Wealth Management in Birmingham, Alabama.
Thursday's session marked the first time that both the Dow
and the S&P 500 set intraday record highs since May 22. On that
same day, the rally was interrupted when Bernanke hinted that
the Fed planned to begin pulling back its stimulus. His comments
triggered a sharp selloff, leading to a drop of nearly 6 percent
in the S&P 500 over the next month.
The Dow Jones industrial average rose 78.02 points,
or 0.50 percent, to end at 15,548.54, a record high. The
Standard & Poor's 500 Index gained 8.46 points, or 0.50
percent, to a record close of 1,689.37. The Nasdaq Composite
Index added 1.28 points, or 0.04 percent, to 3,611.28.
At Thursday's close, the benchmark S&P 500 was up 18.5
percent for the year.
Analysts' estimates for corporate earnings have been lowered
so much that investors believe the low targets should be easily
exceeded. Instead, investors probably will hone in on revenue
figures and outlooks.
"Earnings have been pretty much coming in, in line with
expectations," Hellwig said.
IBM raised its full-year outlook and reported
earnings that beat estimates, though the company's revenue
missed forecasts. Shares of International Business Machines
rose 1.8 percent to $197.99. IBM gave one of the biggest lifts
to the S&P 500 and helped offset the impact of slides in Intel
Intel, which limited the Nasdaq's gain, slid 3.8 percent to
$23.24 after the world's biggest chipmaker cut its full-year
revenue forecast. Shares of eBay fell 6.7 percent to $53.52
after the e-commerce company said full-year results would be at
the low end of its forecast range.
There were more disappointing tech results after the bell.
Shares of Google fell 4.9 percent to $865.73 following
the release of its earnings, which reflected a drop in its
online ad prices. Google ended the regular session down 0.9
percent at $910.68.
Microsoft shares also fell after the close. The stock was
down 4.5 percent at $33.85 after it reported lower-than-expected
quarterly earnings. Slow personal computer sales hurt its
Windows business, Microsoft said.
Shares of Advanced Micro Devices slid 3.5 percent to
$4.48 in extended-hours trading following the chipmaker's
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. So far, 70.4
percent of all companies that have reported results have
surpassed analysts' earnings expectations, while 49.4 percent
have topped revenue views.
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 1.9 percent to
The day's economic data signaled strength in the economy.
New claims for U.S. jobless benefits fell by 24,000 last week to
a seasonally adjusted 334,000, the lowest since early May. An
index of factory activity in the Mid-Atlantic region increased
in early July to 19.8, its highest level in more than two years,
according to the Federal Reserve Bank of Philadelphia.
After the close, the city of Detroit filed for bankruptcy,
the largest-ever municipal bankruptcy in U.S. history.
Volume was roughly 6.1 billion shares traded on the New York
Stock Exchange, the Nasdaq and the NYSE MKT, below the average
daily closing volume of about 6.4 billion this year. On Monday,
volume hit its lowest for any full trading day this year.
Advancers outnumbered decliners on the NYSE by a ratio of 2
to 1 in Thursday's session. On the Nasdaq, five stocks rose for
every three that fell.