Stocks Close Higher On Positive Reaction To Tech Earnings - U.S. Commentary

(RTTNews) - After moving mostly higher over the course of the two previous sessions, stocks saw some further upside during trading on Friday. Benefiting from strength among tech stocks, the Nasdaq extended a recent uptrend to reach a new record closing high.

The major averages all closed in positive territory, although the Nasdaq outperformed its counterparts by a wide margin. While the Nasdaq advanced 36.02 points or 0.7 percent to 5,092.08, the Dow crept up 21.45 points or 0.1 percent to 18,080.14 and the S&P 500 rose 4.76 points or 0.2 percent to 2,117.69.

For the week, the Nasdaq surged up by 3.2 percent, while the Dow and the S&P 500 jumped by 1.4 percent and 1.8 percent, respectively.

The strong gain posted by the Nasdaq was partly due to a rally by shares of Microsoft (MSFT), with the software giant surging up by 10.5 percent.

The gain by Microsoft came after the company reported better than expected third quarter results after the close of trading on Thursday.

Online retail giant Amazon (AMZN) also moved sharply higher after reporting first quarter results that exceeded estimates and providing upbeat guidance for the second quarter.

Even shares of Google (GOOG) moved to the upside despite the tech giant reporting first quarter adjusted earnings and revenues that missed estimates.

Nonetheless, overall trading activity was somewhat subdued on the day as traders looked ahead to next week's Federal Reserve meeting.

The Fed is not expected to announce an increase in interest rates, but traders will be paying close attention for any hints at a rate hike at the June meeting.

On the economic front, the Commerce Department released a report showing a sharp increase in durable goods orders, although the jump was primarily due to strength in the volatile transportation sector.

The report said durable goods orders surged up by 4.0 percent in March after slumping by 1.4 percent in February. Economists had expected orders to edge up by just 0.5 percent.

However, excluding a 13.5 percent jump in orders for transportation equipment, durable goods orders actually fell by 0.2 percent in March compared to a 1.3 percent drop in the previous month.

Sector News

Software stocks saw substantial strength on the day, with Microsoft leading the sector higher. Reflecting the strength in the sector, the Dow Jones Software Index surged up by 4.2 percent.

With the strong upward move, the software index ended the session at its best closing level in well over fourteen years.

Considerable strength was also visible airline stocks, as reflected by the 2 percent gain posted by the NYSE Arca Airline Index. With the gain, the index reached a one-month closing high.

Hawaiian Airlines parent Hawaiian Holdings (HA) posted a standout gain, jumping by 9.8 percent after reporting better than expected first quarter results.

Internet, steel, and housing stocks also saw significant strength on the day, with Juniper Networks (JNPR) posting a strong gain within the internet sector after beating first quarter estimates.

On the other hand, semiconductor stocks extended the pullback seen in the previous session, dragging the Philadelphia Semiconductor Index down by 1.7 percent. Maxim (MXIM) fell sharply after providing disappointing guidance.

Gold, oil service, and computer hardware stocks also moved notably lower, helping to limit the upside for the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in yet another mixed performance on Friday. Japan's Nikkei 225 Index dropped by 0.8 percent, while Hong Kong's Hang Seng Index advanced by 0.8 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the German DAX Index climbed by 0.7 percent, the French CAC 40 Index rose by 0.4 percent and the U.K.'s FTSE 100 Index edged up by 0.2 percent.

In the bond market, treasuries moved moderately higher, extending the upward move seen in the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 1.917 percent.

Looking Ahead

While the Fed announcement is likely to be in the spotlight next week, trading could also be impacted by the release of reports on first quarter GDP, consumer confidence, personal income and spending, and manufacturing activity.

On the earnings front, Apple (AAPL), Ford (F), Merck (MRK), Pfizer (PFE), Time Warner (TWX), Exxon Mobil (XOM), and Visa (V) are among a slew of companies due to report their quarterly results next week.