Wall Street Extends Winning Streak on 1Q Earnings

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The blue chips advanced for a third straight day as optimism over encouraging corporate earnings overshadowed gloomy economic data.

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Today's Markets

The Dow Jones Industrial Average was up 72.4 points, or 0.57%, to 12,763, the S&P 500 gained 4.8 points, or 0.36%, to 1,360 and the Nasdaq Composite climbed 2.7 points, or 0.09%, to 2,873. The FOX 50 was edged higher by 3.6 points to 955.

Transportation companies such as Norfolk Southern (NYSE:NSC) and Union Pacific (NYSE:UNP) led the way higher.  Energy issues like ConocoPhillips (NYSE:COP) and Petroleo Brasileior (NYSE:PBR) lagged behind.

The markets gained the last three days as strong earnings from major companies and the Federal Reserve's reaffirmation of its highly-expansionary monetary policy gave stocks a boost. Indeed, the Nasdaq hit a 10-year high on Thursday.

The first read of U.S. gross domestic product showed the economy expanded at an annualized rate of 1.8% in the first quarter of 2011.  Economists expected the economy to have grown at rate of 2% for the quarter.  The report also showed a substantial pickup in quarter-over-quarter headline and core inflation.  The so-called PCE price index, which the Fed closely monitors, soared 3.8%, or  1.5% excluding volatile food and energy prices.

Recent data have foreshadowed the slowdown, and many economists are already looking to see if the economy will be able to regain its footing in the current quarter.

"Higher gasoline prices and supply disruptions in the wake of the Japanese earthquake may hinder the springtime reacceleration in activity," wrote economists at RBS in a note.

Weekly jobless claims jumped by 25,000 to 429,000 in the prior week -- far higher than the 392,000 economists expected. The four-week-moving-average, which helps to reduce volatility is now at 408,500.  Generally, claims under the 400,000 level point to moderate recovery in the labor market.

"The trend over the past few weeks is clearly disappointing as signs were pointing to a more sustainable pick up in the labor market," wrote Peter Boockvar, managing director at Miller Tabak + Co. in a note.

Bookvar also notes that companies may be forced to cut staffing as energy and material prices have soared in a bid to maintain profit margins.

Pending home sales jumped 5.1% in March -- easily topping economists' forecast of a gain of 1.5%. However, the number of signed real estate contracts were still off 11.4% from the same month last year.

"We look for the housing market to recover further in the near term, albeit at a gradual pace, as the economy continues to grow," wrote Barclays Capital economist Theresa Chen in a note.

On the corporate front, Microsoft (NASDAQ:MSFT) posted earnings of $5.7 billion, or 61 cents a share after the closing bell, zipping by forecasts of 56 cents. The technology-giant's bottom line was boosted by growth in its business division and revenue from its Xbox gaming console.

Oil giant ExxonMobil (NYSE:XOM) earned $10.65 billion, or $2.14 a share, topping Wall Street's view of $2.07 a share. The largest U.S. company by market capitalization benefited from high oil prices and widening margins in its refineries.

Procter & Gamble (NYSE:PG), the consumer-product giant, posted fiscal third-quarter profits of $2.87 billion, a gain of 11%, which was inline with expectations.

Sprint (NYSE:S) revealed a first-quarter loss of $439 million, or 15 cents a share, far narrower than Wall Street's forecast of a loss of 22 cents.

The dollar fell to its lowest level in three years after the Federal Reserve said it would keep interest rates at extraordinarily low levels.  Generally, capital follows higher interest rates, which can now be found abroad, which decreases demand for the dollar, hence forcing the exchange rate down.

The greenback slipped 0.28% against a basket of world currencies, and the euro gained 0.26% against the U.S. dollar.

Weakness in the U.S. dollar, however, does make it less expensive for companies abroad to purchase U.S. goods, which could potentially boost exports, economists say.

Energy markets were subdued after fairly volatile trading in the prior session.

Light, sweet crude settled higher by 10 cents, or 0.09%, to $112.86 -- the highest settle since September 2008.  Wholesale RBOB gasoline for May delivery tacked on 1 cent, 0.3% to $3.43, closing at its highest point since July 2008.

Gasoline prices on the consumer level continue marching higher.  A gallon of regular gas at the pump cost $3.89 on average nationwide, up from $3.59 last month and $2.87 last year, according to the AAA Fuel Gauge report.

Gold was up $14.20, or 0.94%, to $1,531 a troy ounce -- yet another record high for the metal.

Corporate News

Akami's (NASDAQ:AKAM) second quarter outlook of between 34 and 37 cents a share missed the Street's view of 38 cents, prompting several downgrades from ratings firms and sending the stuck deep into the red.

Cisco (NASDAQ:CSCO)  is offering early retirement to some employees as part of its "targeted moves" to refocus the company.

Dow Chemical (NYSE:DOW) posted a 34% rise in first-quarter profits amid solid sales growth and strength in its chemical business.

Exelon (NYSE:EXC) plans on acquiring rival energy company Constellation Energy (NYSE:CEG) for $7.9 billion.

Chrysler plans on repaying the U.S. and Canadian government for bailout loans during the second quarter of 2011.

Aetna (NYSE:AET) unveiled first-quarter profits of $586 million, or $1.50 a share, easily besting estimates of 97 cents. The health insurer also plans on acquiring Prodigy Health Group for $600 million.

Foreign Markets 

The English FTSE 100 traded higher by 0.03% to 6,070, the French CAC 40 was up 0.91% to 4,105 and the German DAX climbed 0.95% to 7,475.

In Asia, the Japanese Nikkei 225 soared 1.6% to 9,849 and the Chinese Hang Seng slid 0.36% to 23,806.

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