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Stocks surge on strong earnings

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Stocks surge on strong earnings

Stocks in the US were mixed on the open with the Dow and S&P higher and Nasdaq 100 moving lower.  Earnings after the bell on Wednesday and prior to the opening bell on Thursday were largely positive with IBM, American Express and Morgan Stanley beating expectations, and Ebay coming in worse than expected.  After the bell on Thursday, Google will release its earnings which will likely be a driver of stock market action on Friday.

Ben Bernanke was again on the hill giving testimony to the Senate as part of his bi-annual Humphrey Hawkins testimony.  Bernanke comments on Wednesday seem to mimic comments made in early July after the FOMC meeting minutes were release which were that bond purchases would not be altered until economic data supported a change.

On the earnings front, the two biggest contributors to the broader indexes rise where Morgan Stanley and IBM.  MS reported net income of $980 million versus net of $591 million a year ago. Per-share earnings were 41 cents compared with earnings of 29 cents a share a year earlier. The stock jumped nearly 4% on the open and traded higher for most of the trading session.

The Dow Industrial surged on the open and continued to trade higher for the balance of the trading session making a new intra-day all-time high.  The Dow Industrials also made a new all-time closing high and Dow Theory was confirmed with the transport also making a new all-time closing high.

Despite the meteoric rise in the Dow Industrials, the RSI (relative strength index) is still only printing at 65, below the overbought trigger level of 70.  Momentum is still strong with the MACD printing in positive territory.

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