Stocks moved higher for the third day in a row this week as strong data out of the U.S. and China, encouraging words from Janet Yellen, and some upside earnings reports sent markets back toward record highs. The Dow Jones Industrial Average (DJINDICES:^DJI) finished up 162 points or an even 1%, while the S&P 500 gained 1.1% and the Nasdaq jumped 1.3%.
Among news sending the market higher was China's reporting a GDP increase of 7.4% in the first quarter this year, its lowest level in a year-and-a-half, but the results exceeded expectations as analysts projected growth at 7.3%. China's growth rate is closely watched as the world's second biggest economy has been the primary driver of global economic growth in the past 10 years, especially as the U.S. and Europe have struggled since the economic crisis. Speaking to the Economic Club of New York, Federal Reserve Chairwoman Janet Yellen stood by the central bank's commitment to keep interest rates low for as long as necessary, and the Fed's Beige Book, or its survey of economic activity across the nation, showed the economy expanding in 10 of its 12 districts. It also pointed to earlier sluggishness caused by poor weather. Elsewhere, industrial production grew by more than expected last month, while housing starts and building permits were roughly in line with February's levels.
Shares of SodaStream (NASDAQ:SODA) were bubbling higher today, finishing up 8% on news that a major investor would take a 16% stake in the maker of the countertop soda-machine maker. The news was reported by Israeli financial daily Calcalist, which said that Starbucks, PepsiCo, and Dr Pepper Snapple are the potential investors in the deal, though SodaStream or the potential buyers would not confirm the rumors. Calcalist said the deal would value SodaStream at $1.1 billion, or about $52 a share. The valuation is welcome news for SodaStream shareholders, but the stock has been pumped up before on rumors, hitting as high as $78 last summer on reports that Pepsi was looking to purchase the innovative soda-maker, though those rumors proved untrue.
After hours, Google (NASDAQ:GOOG) (NASDAQ:GOOGL) shares were down 3% after the search giant's earnings report missed expectations. Earnings per share hit $5.27, short of estimates at $5.39, while revenue increased 19% to $15.42 billion, also missing estimates at $15.52 billion. On the search side, the pattern from recent quarters continued as the number of paid clicks grew 26% but cost-per-click fell 9% as mobile searches, which are less valuable, continue to grow share. Google also reported another loss in its Motorola Mobility subsidiary, which it plans to sell to Lenovo for $2.9 billion, much less than the $12.4 billion it acquired it for two years ago. Still, 19% sales growth is stellar for a company of Google's size. The bigger concern for investors may be the company's stiff price tag, at a P/E near 30.
Jeremy Bowman owns shares of SodaStream. The Motley Fool recommends and owns share of Google (A and C shares), PepsiCo, SodaStream, and Starbucks. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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