Dow reaches another high recovering from early sell off

Fuelled by good earnings report, Dow stumbles to another high though Asian markets’ sell off leads to a shaky start

U.S. stocks initially fell today but then turned a bit higher as investors shrugged off concerns about overheating in China and global growth and turned their attention towards better-than-expected earnings. The Dow Jones Industrial Average was down as much as 69 points right after the open and up as much as 25 points this afternoon but finally closed the day marginally up at 12,803, setting another record high. U.S. stocks once again closed mixed on Thursday, with Nasdaq and S&P 500 ending in red.

Only 16 out of 30 Dow stocks closed higher today. Six out of ten economic sectors posted losses today. For the day (19 April, Thursday) the Dow Jones Industrial Average closed higher by 4.79 points at 12808.63, Nasdaq lower by 5.15 points at 2505.35 and S&P 500 lower by 1.77 points at 1470.73.

Asian market once again started to haunt the US market after a big Chinese sell-off (4.5%) and Nikkei 225 falling 1.7% and Hong Kong's Hang Seng Index plunging 2.3%. Higher than expected GDP and CPI reports from China initially renewed concerns about the Chinese government coming up with a possible rate hike to combat inflation. The Chinese economy grew 11.1% in the first quarter exceeding expectations for growth of 10.3% and was also higher than the 10.4% growth seen in the fourth quarter of 2006.

On the earnings front, eBay reported higher quarterly results that beat analysts' forecasts and provided an encouraging outlook for the year. Still, its shares traded lower, losing more than 3% during the regular trading session after Deutsche Bank issued a “sell” on that stock. Dow component Merck beat Wall Street estimates, in terms of both topline and bottomline and reaffirmed its profit outlook for the year sending shares modestly higher.

Intel pushes Dow to another record high

Stocks opened lower in the morning with all three indices trading in red. 9 out of 10 sectors were trading lower paced by a 0.7% decline in Materials.

But Health Care gave a good boost within an hour and this changed the momentum to some extent for the market. A relief rally in Amgen, following upbeat results from a study regarding its blockbuster drug Aranesp, provided the bulk of sector support.

During the lunch hours, the Philly Fed checked in and was below forecasts at 0.2% in March. But it did not disappoint investors as the report showed overall activity in the region's manufacturing sector was steady this month and that new orders edged higher.

But Tech continued to give a hard time to the market even today. While market anxiously waited for Google’s result after close, Yahoo lost another 3% today adding to yesterday’s 11%. But one bright spot for tech was Intel which surged 2.2% after being upgraded. Also, Intel was an integral reason the Dow hit a new record again today and why the tech sector's decline was minimal.

Crude prices drop by more than $1.3 on Chinese growth figures and as Enbridge resumes shipment. Crude-oil futures for light sweet crude for May delivery closed at $61.80/barrel (lower by $1.33/barrel or 2.1%) on the New York Mercantile Exchange. Crude prices fell today after Enbridge, which supplies Canadian oil to the U.S. resumed shipments through a pipeline that was shut because of a leak. The upcoming expiration of the May contract at the end of Friday's close also likely intensified oil's latest move. Prices are down 14% from a year ago.

Trading volumes showed 1.6 billion shares exchanging hands on the New York Stock Exchange and 2.1 billion trading on the Nasdaq stock market. Breadth remained negative, with declining issues topping decliners by 20 to 11 on the NYSE and by 9 to 5 on the Nasdaq.

Google handily beat Wall Street expectations and its excellent results took the stock higher in the after-market hours. Like the rest of the week, investors will once again look for corporate earnings to help set the tone of trading for tomorrow when Dow components Caterpillar, Honeywell, McDonald's, and Pfizer report their quarterly results.