Markets
Wall Street shot higher Thursday, extending its rally into a second session as tumbling energy prices bolstered an already upbeat mood that followed stronger-than-expected quarterly reports from big names like JPMorgan Chase and United Technologies. The Dow Jones industrial average rose more than 200 points, bringing their two-day advance to more than 480.
Investors got a double dose of good news after weeks of angst about the economy. Light, sweet crude fell $5.31 to settle at $129.29 a barrel; oil has dropped more than $15 in just the past three sessions. And early Thursday, three components of the Dow industrials – JPMorgan Chase & Co., United Technologies Corp. and Coca-Cola Co. – issued comments that generally indicated that their businesses are holding up despite sometimes difficult economic conditions.
The reports let investors put aside some of their worst fears about the economy. Still, Wall Street has had some up periods in the past few months as optimism grew – only to fall back into a downturn as worries about the financial sector and the economy have welled back up.
“The sentiment has just been so negative that even a whiff of positive news is driving the markets,” said Kevin Dorwin, principal at wealth management firm Bingham, Osborn & Scarborough in San Francisco.
JPMorgan Chase posted a 53 percent decline in its second-quarter earnings as mortgage and other loan defaults worsened, but the decline in profits wasn't as steep as Wall Street had feared and the stock rose $4.86, or 13.5 percent, to $40.80. Associated Press
Technology
Google Inc.'s profit trailed analysts' estimates for the third time since the Internet company sold shares to the public as spending on new projects surged, sending the stock down in after-market trading as much as 12 percent.
If the decline holds when the market opens today, that would be the largest drop since the 2004 initial public offering for Google, the world's most popular Web search engine. Excluding costs such as stock-based compensation, profit amounted to $4.63 per share, trailing the $4.73 average of estimates compiled by Bloomberg.
Research spending climbed 65 percent, sparking investor ire because Google is boosting the budget as the economy slows and concern about demand for Internet advertising is spreading. Today, Chief Executive Officer Eric Schmidt said for the first time the company faces “a more challenging economic environment.”
Google, based in Mountain View, California, fell as low as $471.06 in after-hours trading after closing at $533.44 on the Nasdaq Stock Market. The stock has fallen 23 percent this year. Net income rose to $1.25 billion, or $3.92 a share, from $925 million, or $2.93, a year earlier, the company said. Sales excluding revenue from partner sites climbed 43 percent to $3.9 billion. Google doesn't provide forecasts. Bloomberg News
Banking
Merrill Lynch & Co. on Thursday reported a $4.9billion loss amid massive write-downs from soured mortgage positions and other risky investments, and unveiled plans to raise money by unloading assets.
The world's largest brokerage posted its fourth straight quarterly loss as it struggles to shore up a balance sheet battered by the global credit crisis. Merrill Lynch took $9.4billion of charges and write-downs from mortgage-backed securities, unprofitable hedge positions, and residential mortgage exposure.
The new charges come on top of nearly $29 billion in write-downs that the New York-based brokerage had already taken because of tightening credit markets. Global banks and brokerages have been forced to take some $300 billion of write-downs in the past year.
Merrill also said it had reached a deal to sell its 20 percent stake in news and data provider Bloomberg LP for $4.43 billion, and is close to selling its controlling interest in Financial Data Services Inc. for upward of $3.5 billion. Associated Press
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