U.S. Technology Stocks Extend Gains

By Saumya Vaishampayan And Corrie Driebusch 

Technology stocks rose Friday following strong corporate results, putting the Nasdaq Composite on track to push further into record territory.

The Nasdaq Composite rose 28 points, or 0.6%, to 5085 and the S&P 500 climbed 1.4 points, or 0.1%, to 2114.

The Dow Jones Industrial Average declined 39 points, or 0.2%, to 18020.

"Tech is the whole story today on the upside," said Art Hogan, chief market strategist at Wunderlich Securities "That's where the excitement is," he added.

"The Nasdaq has been outperforming this earnings season as it's clearly less impacted by energy prices and the strong dollar," Mr. Hogan said.

The Nasdaq Composite advanced Thursday to a record close, its first since March 10, 2000. The tech-heavy index rose 0.4% to close at 5056.06, surpassing its previous all-time high of 5048.62.

The Nasdaq's gains this year have outpaced advances in the Dow industrials and S&P 500. The Nasdaq has rallied 6.8% in 2015 through Thursday's close, while the Dow has added 1.3% and the S&P has advanced 2.6%. Over the last 12 months, the Nasdaq has surged 22%, more than twice the Dow's 9.4% gain.

On Friday the index's rise was driven primarily by a number of solid corporate earnings reports.

Microsoft Corp. said late Thursday sales in the third quarter ended March 31 rose nearly 6.5% from a year earlier, boosted in part by the inclusion of sales from Nokia Corp.'s mobile-phone business. Sales beat Wall Street's expectations even as a strong U.S. dollar weighed. Shares rose 5.9%, adding about 17 points to the Dow.

Google Inc. said its revenue took a hit from the rising dollar in the first quarter, as the company generates more than 55% of its revenue outside the U.S. But shares rose 3.3% as better expense control boosted profit margins.

Amazon.com Inc. swung to a first-quarter loss despite rapidly rising sales, as it continued to spend heavily to fund a variety of projects. Shares of the e-commerce giant rallied 14%.

Overall, first-quarter earnings are coming in above lowered expectations.

"There was clearly a lot of downward managing of expectations going into the season, but the beats are broader than usual," said Stephen Freedman, head of cross-asset strategy at UBS Wealth Management Americas. He said he likes consumer discretionary as well as technology companies, and expects earnings to drive more stock-market gains through the rest of 2015.

"We don't think it's going to be spectacular from here, but we're looking for high single-digit returns for the year," he said.

In other corporate news, Starbucks Corp. said its profit and sales rose in its latest quarter, with results roughly in line with analyst expectations. Shares rose 3.5%.

Comcast Corp. on Friday ended its plans to acquire Time Warner Cable Inc., as increasing pressure from regulators prompted the end of the $45.2 billion deal. Shares of Comcast added 0.9% and shares of Time Warner gained 2.4%.

In commodity markets, crude-oil futures fell 1.4% to $56.95 a barrel. Gold futures slipped 0.5% to $1187.70 an ounce. The yield on the 10-year Treasury note fell to 1.922% from 1.945% on Thursday. Yields rise as prices fall.

European stocks were mixed, with Germany's DAX adding 0.2% while France's CAC 40 lost 0.1%.

Write to Saumya Vaishampayan at [e-mail] and Corrie Driebusch at [e-mail]

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