After two days of losses, the stock market today (Friday) reversed the slide and opened higher, thanks to better-than-expected earnings from Hewlett-Packard Co. (NYSE: HPQ) and American International Group Inc. (NYSE: AIG)
Shortly before 1 p.m. on Wall Street, the Dow Jones Industrial Average was up 114 points to 13,994.62, the Standard & Poor's 500 Index added 10.6 to 1,513.02 and the Nasdaq advanced 25 to 3,156.34.
While all three indexes are on track for their worst week of the year, the Dow is still up some 6% since the start of 2013, the S&P 500 has gained 5% and the Nasdaq has tacked on almost 4% despite giving back all of February's gains during the two-day selloff.What Happened to the Stock Market in February?
Stocks began January with a bang, but failed to keep the momentum going in February.
The Dow ended the first month of the year within reach of its all-time high of 14,164.53. Since the pause, the benchmark now rests about 2% from its record.
The pullback comes as investors are growing cautious about banking on further gains. The S&P has logged seven consecutive weeks of gains, shrugging off negative news, including the looming automatic spending cuts set to kick in next Friday and mounting worries about economic conditions in Europe.
The selloff was stoked Wednesday when minutes from the Fed's January FOMC meeting revealed some central bankers have become anxious about the impact the Fed's loose monetary policies will ultimately have on the economy. The Fed's stimulus measures have been a catalyst and cushion for equities since quantitative easing began in November 2008.
"The economic backdrop is just not good enough to justify this market. We won't get to an all-time high until Washington gives us some clarity," Burt White, CIO at LPL Financial in Boston, told The Wall Street Journal.Stock Market Today: What's Behind the Gains?
Fueling the rally in the stock market today was an earnings beat from Hewlett Packard. The No. 1 personal computer maker reported Q1 revenue of $28.4 billion, beating consensus estimates of $27.8 billion.
Earnings came in at 82 cents a share, better than the 71 cents forecast. The company also guided higher for the second quarter. Shares jumped 10.58% Friday at $18.92 and were on track for their biggest one-day gain.
Investors applauded the cost-cutting efforts under CEO Meg Whitman, which appear to be working.
"The turnaround is on track and we did better than we expected that we would. The patient showed some signs of improvement, and I think we should be encouraged," Whitman said on a conference call following the earnings release.
Also helping markets were numbers from AIG. The company lost $4 billion during the last three months of 2012, dragged down by costs related to Hurricane Sandy.
But the insurer, which became a household name after it received a $182 billion bailout package from the government at the height of the financial crisis in 2008, posted an operating profit that was better than expected. Shares gained 3.11% and were last trading at $38.42.
Shares of Apple Inc. (Nasdaq: AAPL) added $2.72 to $488.75 after billionaire hedge fund manager and activist investor David Einhorn of Greenlight Capital unveiled a plan Thursday for the iPhone maker to issue preferred shares. He says such a move would give shareholders more value while allowing Apple to retain its $137 billion stash of cash.
J.C. Penney Co. Inc. (NYSE: JCP) rose nearly 5% after the retailer squared off in court with rival Macy's Inc. (NYSE: M) over the right to sell items from the domestic diva Martha Stewart. Penney's appears to be the winner in this battle. Macy's shares shed almost 1%.
Abercrombie & Fitch Co. (NYSE: ANF) shares slipped more than 7% despite reporting Q4 earnings that more than tripled and raising its dividend to 20 cents from 17.5 cents. The teen retailer reported a profit of $157.2 million, or $1.95 a share, up from $45.8 million, or 52 cents a share, a year earlier. Revenue rose 11% to $1.47 billion.
But the New Albany, OH-based company plans to close 40-50 stores in the U.S. this year and projected earnings of $2.25 to $3.45 a share for 2013, below estimates of $3.63.
Not sure what to do in these markets? Here's what our Chief Investment Strategist suggests: As Volatility Hits New Lows, It Could Be Time to Sell
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