* GE, IBM shares drop after earnings
* Preliminary July UMich reading misses expectations
* Indexes up: Dow 0.23 pct, S&P 0.35 pct, Nasdaq 0.61 pct
(Updates to open; adds quote, data)
By Chuck Mikolajczak
NEW YORK, July 18 U.S. stocks rebounded modestly
on Friday, after the S&P 500 suffered its worst decline since
April 10, but the benchmark index remained on track for a second
straight weekly decline.
Investors will continue to keep a close eye on geopolitical
tensions, as world leaders demanded an investigation after a
Malaysian airliner was downed at the Ukraine-Russia border and
Israel announced the start of a Gaza ground campaign on
The CBOE Volatility index dropped 8.1 percent to
13.36, after a 32 percent surge to 14.54 in the prior session -
its biggest jump since April 2013. The index still remains well
below its historical average of around 20.
Google Inc gained 2.2 percent to $593.52 as the
biggest boost to the S&P 500 after the world's No.1 Internet
search company posted second-quarter results and said its chief
business officer would leave the company.
"It seems counter-intuitive given the ruthlessness with
which the market sold off yesterday, but in the broader context
the markets are generating a lot of attractive themes," said
Peter Kenny, chief market strategist at Clearpool Group in New
"We have an economy that is expanding - we have many data
points that support that narrative - we are in the middle of
earnings season and earnings season has given investors reason
to believe that what we have seen in the headlines over the last
day or two, though very important, aren't what is driving
General Electric shed 1.2 percent to $26.30 after the
conglomerate posted growth in second-quarter earnings that
Fellow Dow component IBM also lost ground, down 0.7
percent to $191.21 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 shares gained 0.8
percent to $95.97
The Dow Jones industrial average rose 38.66 points or
0.23 percent, to 17,015.47, the S&P 500 gained 6.9 points
or 0.35 percent, to 1,965.02 and the Nasdaq Composite
added 26.59 points or 0.61 percent, to 4,390.04.
The Thomson Reuters/University of Michigan's preliminary
July reading on the overall index on consumer sentiment came in
at 81.3, below both the consensus analyst expectation of 83 and
the final June read of 82.5.
S&P 500 companies' profits are expected to grow 4.9 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 percent.
Thomson Reuters data also shows that of 66 companies in the
S&P 500 that reported earnings through Thursday morning, 68.2
percent beat Wall Street expectations, roughly in line with the
67 percent rate for the past four quarters and above the 63
percent rate since 1994.
(Editing by Bernadette Baum)