Dhanvarsha: U.S. stock rally lifts indexes into weekly gains

Saturday, October 22, 2011

U.S. stock rally lifts indexes into weekly gains

U.S. stocks surged Friday, lifting two major indexes into weekly gains, as optimism ahead of a weekend European Union summit, the past days’ economic data, and McDonald’s Corp. profit triggered buying momentum that built into the close.

The Dow Jones Industrial Average DJIA +2.31% ended up 267.01 points, or 2.3%, at 11,808.79, closing near its highs of the session. All but two of 30 components ended higher, led by Travelers Cos. TRV -0.80% and American Express Co.

“Stocks are being driven by strong earnings, economic numbers that aren’t awful, and hope that Europe won’t be a disaster,” said Matthew Tuttle, chief investment officer at Tuttle Wealth Management, LLC in Stamford, Conn.

So far in the third-quarter earnings season, 75% of companies have reported earnings per share above estimates. That’s roughly in line with the 74% that beat in the past four quarters, according to FactSet.

Wall Street, however, was cool to a handful of bellwether stocks following results.

General Electric Co. GE +0.06% shares fell 1.9%, leading Dow decliners, after the financial and industrial conglomerate matched but did not top Wall Street views, a first since 2008, and analysts noted a slower growth in industrial orders. Read more on GE's orders.

Microsoft Corp. MSFT -0.04% edged up 0.4% after the tech company reported results largely in line with analysts’ expectations. Read more on Microsoft.

With Friday’s gains, the Dow quit a choppy 10-session stretch of sessions when it closed in a different direction from each of the prior sessions. The Dow has now closed higher for two days. The index climbed 1.4% for the week to log its fourth-straight week of gains — the longest stretch since January.

Volume was sizeable. Trading on the New York Stock Exchange topped 1.1 billion, while NYSE composite volume was over 4.5 billion.