Wall Street Beat: Tech stocks jump as market indexes hit milestones

Social networking earnings highlight the importance of the mobile market

By , IDG News Service |  IT Management

On the back end of an earnings season that by many accounts could have been worse, tech investors appeared to be in the mood to celebrate on Friday, sending shares of IT companies higher as key stock-market indexes hit milestone highs.

Both the Dow Jones Industrial Average and the Standard and Poor's 500 index hit never-before-reached round numbers. The Dow hit 15,000 points before closing slightly lower for the day. The S&P gained 1.05 percent to close at 1614.42.

All five of the Dow's tech stocks rose: Hewlett-Packard by $0.18 to close at $20.63; Intel by $0.70 to close at $23.92; IBM by $2.12 to close at $204.51; Microsoft by $0.33 to close at $33.49; and Cisco by $0.10 to close at $20.83.

The Nasdaq Computer Index joined in the general exuberance, rising 0.92 percent to close at 1646.61.

Several key employment figures helped boost investor confidence. On Thursday, the U.S. Department of Labor reported that unemployment benefit applications fell last week to 324,000, the lowest since January 2008, before the virtual implosion of Wall Street in September that year. Then Friday, the employment report for April showed that 165,000 new jobs were added to the U.S. economy, a greater number than expected, and that the unemployment rate declined slightly to 7.5 percent.

The macroeconomic news appears to be boosting confidence in all sectors at a time when investors were expecting the worst. Just last week, market research firm Forrester Research reduced its forecast for U.S. business and government spending on IT goods and services in 2013 to 6.2 percent, from its January 2013 projection of 7.5 percent.

The main reason for the reduced forecast was the U.S. government cuts of about $65 billion in federal spending over the next six months as part of the so-called sequestration budget compromise.

So far this earnings season, results have been mixed, but bellwether vendors for the most part have reported better-than-expected earnings. This week, some marquee names in social networking weighed in with first-quarter reports, highlighting the importance of the mobile market.

The big tech earnings announcement this week was Facebook's, which on Wednesday reported that for the quarter ending March 31, total revenue jumped 38 percent year over year to $1.46 billion. But net earnings did not rise nearly as high, increasing only 7 percent to $219 billion. Costs cut into profit, rising 60 percent year over year, driven primarily by infrastructure expense and increased headcount, Facebook said.

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