Earnings gains drive stocks higher in early trade

NEW YORK (AP) — Solid earnings gains at major U.S. companies drove stocks higher in early trading on Wall Street Wednesday.

The advance put the Dow Jones industrial average and the Standard & Poor’s 500 index back into record territory.

A drop in claims for unemployment benefits also encouraged investors. The number of Americans applying for benefits fell 24,000 last week to 334,000, a sign that steady job gains should continue.

Morgan Stanley was among the standouts among companies reporting second-quarter results, rising 89 cents, or 3.4 percent, to $27.42. The New York bank reported sharply higher earnings driven by investment banking gains. IBM rose $5.46, or 2.9 percent, to $200.10 after its profit beat analysts’ forecasts as software sales grew.

Investors will also be watching for comments from Federal Reserve chairman Ben Bernanke, who is delivering what could be his final semiannual economic report to Congress. Bernanke is appearing before the Senate Banking Committee and repeating testimony he gave to the House Financial Services Committee Wednesday.

Bernanke gave stocks a lift on Wednesday when he said that there was no “preset course” for ending the Fed’s $85 billion-a-month bond-buying program and that any change would depend on how well the economy is doing. Investors have worried that the central bank might reduce its stimulus before the economy was strong enough to withstand it.

The Dow Jones industrial average rose 74 points, or 0.5 percent, to 15,543 as of 10:10 a.m. Eastern Daylight Time. The Standard & Poor’s 500 index climbed 5 points, or 0.3 percent, to 1685.

The Nasdaq composite edged up 3,614 after several weak earnings reports from major technology companies.

eBay fell $3.89, or 6.8 percent, to $53.44 after its CEO John Donahoe said late Wednesday that economic weakness in Europe and Korea will “continue to be a challenge” in the second half of the year.

Intel fell 77 cents, or 3.2 percent, to $23.26 after the world’s largest maker of computer chips predicted flat sales amid a decline in PC sales. The company’s earnings and revenue fell in the second quarter.

In government bond trading, the yield on the 10-year note edged up to 2.52 percent from 2.49 percent late Wednesday.

In commodities trading, the price of oil rose $1.10, or 1 percent, to $107.57 a barrel. The price of gold gained $6.10, or 0.5 percent, to $1,283.70 an ounce.

The dollar rose against the euro and the Japanese yen.

Among other stocks making big moves, UnitedHealth Group, the nation’s largest health insurer, rose $3.72, or 5.6 percent, to $69.92 after reporting earnings that beat analysts’ estimates. The company’s enrollment increased by 3 million people. UnitedHealth is the first major health insurer to report earnings every quarter and is seen as a bellwether for other insurers.

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