Optimistic results from Google and Boeing led stocks higher for a third straight session yesterday as a widely anticipated rate increase...
NEW YORK — Optimistic results from Google and Boeing led stocks higher for a third straight session yesterday as a widely anticipated rate increase and a little-changed policy statement from the Federal Reserve freed investors to show some enthusiasm.
The Dow Jones industrial average closed up 44.85 at 10,596.79.
Microsoft, one of the 30 Dow stocks, added 7 cents to close at $26.46 a share.
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Boeing, also a Dow stock, rallied $1.19 at $52.23 after the aerospace giant’s fourth-quarter profits plunged 84 percent on charges related to the loss of a Pentagon contract and the production shutdown of its 717 jet. The results still exceeded Wall Street’s expectations yesterday as earnings and sales rose at the company’s defense unit, now by far its biggest business.
The broader gauges also closed higher. The Standard & Poor’s 500 index gained 3.78 to 1,193.19. The Nasdaq composite index added 6.36 to 2,075.06.
Apprehension over the Fed’s announcement, and the expected 0.25 percentage-point rise in short-term interest rates, overshadowed strong earnings news early in the session. Some buyers were still holding back even after the decision, in anticipation of President Bush’s State of the Union address, though no surprises were expected.
Still, this was only the first time this year that stocks rose for three sessions in a row. Analysts said Wall Street’s overall mood seemed to be turning more positive after the unusually poor showing for stocks in January.
“We do have an optimistic feeling coming off of earnings season. A good percentage came in above expectations, and there was some ratcheting up of growth rates from a lot of companies,” said Michael Palazzi, managing director of equity trading at SG Cowen Securities. “You come off the earnings season, you place your bets, you see how things pan out, and then you say, ‘OK, … why not wait and see what the president has to say?’ ”
The Fed’s Open Market Committee decision, which brings the federal-funds rate — the rate banks charge each other on overnight loans — to 2.50 percent, eliminated a hurdle for the market, but failed to spark a significant rally. Investors reacted “according to the script,” said Ned Riley, chief investment officer of Riley Asset Management in Boston. “The market seems to be taking this in stride. But what I would add, underneath the whole lack of bullishness, is that people don’t like to get in front of the Fed tightening process,” Riley said. “It’s been this way for quite a while now. When companies provide pleasant surprises, like Google … the market is willing to pay up. But to anticipate is clearly much less of a practice today than it’s ever been.”
Google surged 7.3 percent, or $14.06, to $205.96, after reporting fourth-quarter profits that were seven times greater than the previous year. The owner of the world’s most popular search engine would have earned 92 cents per share, excluding charges, far greater than the 77 cents Wall Street had expected.