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The Dow Jones Industrial Average (DJINDICES: ^DJI ) broke through to new record highs today on some strong earnings reports, and good news from the Fed. The blue chips finished the day at 15,549, gaining 76 points, or 0.5%. Earlier in the day, the Dow also set a new intraday-trading record, hitting 15,589.40, while the S&P 500 nearly reached 1,700, setting a new record of its own.
Speaking before the Senate Banking committee today, Fed Chairman Ben Bernanke again shored up concerns that the Fed would act hastily, and put the onus on Congress to do more to focus on reviving the economy rather than cutting the debt. Investors interpreted his remarks, which followed his comment yesterday that the Fed had no "preset course" in its stimulus taper as evidence that the central bank would not pull the trigger ahead of time.
Meanwhile, initial unemployment claims from last week beat expectations, coming in at 334,000 versus estimates of 348,000, though continuing unemployment claims spiked. The Philadelphia Fed's manufacturing report also hit its highest mark in over two years, soaring to 19.8, indicating a robust expansion in manufacturing activity. Economists had projected a figure of just 5.3. Morgan Stanley also beat estimates this morning, sending the financial sector higher, as every big bank has outperformed this earnings season.
On the Dow today, UnitedHealth (NYSE: UNH ) took the cake, jumping 6.5% after reporting earnings this morning. The nation's largest health insurer said EPS grew to $1.40 a share, up from $1.27 a year ago, and much better than estimates at $1.25, citing enrollment growth and fewer claims than expected. The company raised its full-year EPS guidance from $5.25-$5.50, to $5.35-$5.50, but warned that cuts to Medicare Advantage next year cut put pressure on profits.
Reporting this morning as well, Verizon (NYSE: VZ ) shares finished off 1.5%, as the nation's No. 1 wireless provider said revenue rose by 4.3%, to $29.79 billion, slightly behind expectations, as it added contracts for another 941,000 devices in the period. Adjusted EPS came in at $0.73, topping estimates by $0.01, and Verizon also said it would offer more frequent upgrades, following the lead of rivals T-Mobile and AT&T. Despite the slim earnings beat, the stock seemed to fall as wireless EBITDA margins were less than some analysts had projected, and the slew of recent mergers and acquisitions in the industry has put pressure on Verizon to follow suit by buying out the 45% of Verizon Wireless that Vodafone owns.
After hours, Microsoft (NASDAQ: MSFT ) shares plummeted 6% after the software company took a $900 million writedown due to the $150 discount it put on the Surface RT tablet. Adjusting for the charge, earnings came in at $0.66 per share, below estimates at $0.75, as revenue from Windows fell off 6%, due to the disappearing PC market. Overall revenue rose 10%, to $19.9 billion, but that was well off estimates of $20.72 billion.
Looking ahead to tomorrow, markets could get a boost, as Moody's lifted the U.S. credit outlook after hours today to "stable," citing a drop in the deficit , two years after it had lowered it to "negative."
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