Stocks gain for third consecutive week

MarketWatchJanuary 19, 2013 

NEW YORK -- Stocks on Wall Street rose on Friday, posting gains for a third consecutive week after strong earnings from General Electric Co. and encouraging news about the U.S. debt ceiling.

The S&P 500 index climbed 5.04 points, or 0.3 percent, to end at 1,485.98, its highest close since December 2007, leaving it up 1 percent for the week. The benchmark had broken out to the upside on Thursday, with 1,475 now seen as a support level.

"The picture is much brighter than it's been, probably since 2007," said Carol Pepper, chief executive of Pepper International.

News from Washington provided a jolt of optimism. House Majority Leader Eric Cantor said Friday that the House of Representatives will vote next week to authorize a three-month increase in the debt ceiling to give Congress time to pass a budget.

Unless Congress raises the debt ceiling, the U.S. government will run out of money to pay its bills. A short-term extension of the debt limit would be positive, though it will not provide a long-term solution to the U.S. deficit. Sooner or later, Congress and President Barack Obama must agree how to reduce the deficit and avoid another downgrade of the U.S. credit rating.

On Wall Street, the Dow Jones industrial average gained 53.68 points, or 0.4 percent, to end at 13,649.70; it rose 1.2 percent for the week.

Leading gains on the Dow, General Electric Co. shares climbed 3.5 percent after its earnings beat estimates.

Shares of Intel Corp. slumped 6.3 percent, the worst on the blue-chip average, a day after the semiconductor maker said it was bracing for a third consecutive quarter of declining sales, illustrating the global move to mobile devices and away from personal computers. Santa Clara, Calif.-based Intel said it would invest about $13 billion in equipment this year, with the spending topping what analysts had projected.

While the Street hammered Intel's stock due to its spending plan, such a "massive capex-spending plan is good for the economy," said Pepper.

"Today folks are selling Intel because of their capital-expenditure announcement, yet the market appears like it is going higher on China," said Art Hogan, market strategist at Lazard Capital Markets. "GE called out China as a positive influence on the quarter."

In addition to earnings, investors contended with mixed economic news, including a positive report on Chinese growth and downbeat data on U.S. consumer confidence. China's economy expanded 7.9 percent in the fourth quarter compared with a year earlier, beating expectations.

In the U.S., however, the University of Michigan-Thomson Reuters reported its initial read on consumer sentiment fell to 71.3 in January from 72.9 in December.

While analysts had projected sentiment to rise, Pepper and Hogan played down the index's preliminary decline.

"The fact that you're seeing retail sales coming in much better than what was expected for the fourth quarter is a better indicator of consumer sentiment," according to Pepper. "That really happened."

Among individual stock movers on Friday, Capital One Financial Corp. shares fell 7.5 percent after the credit-card lender's fourth-quarter results missed expectations.

Shares of another credit-card issuer, American Express Co., dropped 1.6 percent after the firm reported a slump in quarterly earnings.

Also in the financial sector, S&P 500 component Morgan Stanley rallied nearly 8 percent after the brokerage's earnings topped estimates and its revenue got a lift from its institutional-securities business.

Apple Inc. fell 0.5 percent to end at $500. Apple, which is due to report quarterly results on Wednesday, has seen its shares slump 3.9 percent this week following concerns that demand for the iPhone 5 has been weak.

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