Stocks Extend Upward Trend On Upbeat Earnings News - U.S. Commentary

(RTTNews) - Stocks moved notably higher over the course of the trading day on Friday after initially showing a lack of direction. The gains on the day extended the recent upward trend by the markets, with the tech-heavy Nasdaq reaching its best closing level in almost a month.

The major averages saw further upside going into the close, ending the session near their best levels of the day. The Dow climbed 127.51 points or 0.8 percent to 16,805.41, the Nasdaq advanced 30.92 points or 0.7 percent to 4,483.72 and the S&P 500 rose 13.76 points or 0.7 percent to 1,964.58.

For the week, the major averages all posted substantial gains. The Nasdaq soared 5.3 percent, the S&P 500 jumped 4.1 percent and the Dow surged up 2.6 percent.

The continued strength on Wall Street partly reflected a positive reaction to earnings news from big-name companies such as Microsoft (MSFT) and Procter & Gamble (PG).

Shares of Microsoft surged up by 2.5 percent after the software giant reported fiscal first quarter results that beat expectations.

Consumer products giant P&G also jumped by 2.3 percent after reporting fiscal first quarter results that came in line with analyst estimates. The company also said it is exiting its Duracell battery business

On the other hand, shares of Amazon tumbled by 8.3 after the online retailer reported third quarter results that trailed expectations and issued below consensus revenue guidance for the fourth quarter.

Traders largely seemed to shrug off news that a patient at a New York City hospital tested positive for Ebola, the fourth person diagnosed with the virus in the U.S.

The patient, identified as Craig Spencer, is a doctor who recently returned to the country after treating Ebola patients in West Africa.

Meanwhile, the Commerce Department released a report showing that U.S. new home sales ticked higher in September but from a significantly downwardly revised level in August.

The report said new home sales inched up 0.2 percent to an annual rate of 467,000 in September from the revised August rate of 466,000.

Economists had been expecting new home sales to drop to a rate of 460,000 from the 504,000 originally reported for the previous month.

Sector News

With Microsoft helping to lead the way higher, software stocks showed a particularly strong move to the upside on the day. Reflecting the strength in the sector, the Dow Jones Software Index surged up by 2.1 percent.

CA Technologies (CA) and Check Point Software (CHKP) posted notable gains along with Microsoft, climbing by 2.5 percent and 2.4 percent, respectively.

Significant strength also emerged among airline stocks, as reflected by the 2 percent gain posted by the NYSE Arca Airline Index. With the gain, the index reached its best closing level in a month.

Railroad stocks also turned in a strong performance on the day, driving the Dow Jones Railroads Index up by 1.7 percent to a record closing high. Union Pacific (UNP) helped to lead the sector higher.

Steel, healthcare, biotechnology, and utilities stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Friday. Japan's Nikkei 225 Index jumped by 1 percent, while Hong Kong's Hang Seng Index edged down by 0.1 percent.

Meanwhile, the major European markets all moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the French CAC 40 Index and the German DAX Index both dropped by 0.7 percent.

In the bond market, treasuries pulled back near the unchanged line after seeing early strength, closing nearly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.273 percent.

Looking Ahead

The Federal Reserve's monetary policy meeting is likely to be in focus next week, with the central bank widely expected to wrap up its asset purchase program.

Traders are also likely to keep an eye on reports on durable goods orders, third quarter GDP and personal income and spending.

On the earnings front, DuPont (DD), Exxon Mobil (XOM), Facebook (FB), Merck (MRK), Pfizer (PFE), Sprint (S), Twitter (TWTR), and Visa (V) are among the slew of companies due to report their quarterly results next week.