Record high caps Dow comeback

NEW YORK (CNNMoney.com) -- The Dow industrials hit an all-time high Wednesday, after upbeat earnings from JPMorgan and other blue chips helped the index complete its recovery from the late February sell-off.

The broader S&P 500 (up 1.02 to 1,472.50, Charts) index managed to end at a six-and-a-half-year high for the second session in a row, while the Nasdaq (Charts) composite ended a bit lower.

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The Dow Jones industrial average (up 30.80 to 12,803.84, Charts) added 0.2 percent Wednesday, ending above 12,800 for the first time ever and knocking out its previous closing high of 12,786.64 set on Feb. 20. The Dow also hit a record trading high of 12,838.46 during the session, also beating the old high from Feb. 20.

One week after hitting those highs, the Dow slumped 416 points, its biggest one-day loss in five and a half years, as part of a broader global equity sell-off. Since then, the stock market has essentially been working its way back.

Year to date, the Dow is up 2.5 percent, the Nasdaq is up 4.2 percent and the S&P is up 3.7 percent, with all of those gains having been made in April.

Treasury prices rose Wednesday, driving down yields, while the dollar fell versus major currencies. Oil prices were little changed, and gold ended higher.

While the Dow hitting a new record Wednesday was a positive, it was also deceptive, in that "the rest of the market was just so-so," said Donald Selkin, director of research at Joseph Stevens.

Selkin noted that the Nasdaq and the Russell 2000 - the small-cap index - were both lower on the day. In addition, the market breadth numbers were negative, meaning that more stocks fell than rose, on both the Nasdaq and the New York Stock Exchange.

After the close, eBay (down $0.75 to $34.45, Charts, Fortune 500) reported higher quarterly results that topped forecasts and said that 2007 results would be at the top of analysts' forecasts.

Thursday morning brings quarterly earnings from Dow components Altria and Merck. Other companies due to report include Bank of America (Charts, Fortune 500), Merrill Lynch (Charts, Fortune 500) and Nokia (Charts).

Thursday also brings the March index of leading economic indicators and the April Philadelphia Fed index.

The earnings picture was by and large strong Wednesday, with a few disappointments. Results from Intel, JPMorgan Chase and United Technologies impressed investors, while IBM and Yahoo earnings were less upbeat.

"The market is driven by the fact that first-quarter earnings are coming in higher than what the Street has been looking for," said Ron Kiddoo, chief investment officer at Cozad Asset Management.

But it's still early in the earnings reporting period, with just 13 percent of the S&P 500 having released financial results so far.

Although the early batch of reports have been positive, first-quarter earnings are still on track to rise just 3.6 percent from a year ago, according to the latest Thomson Financial figures, after growing at least 10 percent a quarter for the last 14.

Nonetheless, the day's earnings news was a definite source of support for the market. Also helping: a period of relative calm in terms of world news, said Kiddoo, following several weeks of increased worries about conflicts with Iran.

"We could get dampened by bad world news or a really bad earnings announcement, but that hasn't happened yet," Kiddoo said.

Earlier Wednesday, JPMorgan Chase (up $1.89 to $52.07, Charts, Fortune 500) reported higher quarterly earnings that topped estimates, sending shares of the Dow component and financial powerhouse 3.8 percent higher.

Dow component Boeing (up $3.43 to $93.88, Charts, Fortune 500) rallied 3.8 percent on news that it is the only bidder for a $2.5 billion South Korea jet deal.

United Technologies (up $0.74 to $66.92, Charts, Fortune 500), another Dow stock, rose after the company reported higher sales and earnings that topped estimates.

Fellow Dow component Caterpillar (up $1.71 to $69.37, Charts, Fortune 500) gained on a Wachovia upgrade, Reuters reported. The heavy equipment maker is due to report results Friday.

Intel (up $0.37 to $21.35, Charts, Fortune 500), also a Dow component, reported higher first-quarter earnings that met estimates on lower revenue that missed forecasts late Tuesday. The company also said that gross margins, a key measure of profitability, rose in the quarter and would expand in 2007. Shares gained 1.75 percent Wednesday.

But not all the tech news was positive.

Yahoo (down $3.78 to $28.31, Charts, Fortune 500) reported quarterly revenue and earnings that were short of forecasts late Tuesday, sending shares tumbling nearly 12 percent Wednesday.

IBM reported higher quarterly earnings that met estimates and higher sales that topped forecasts late Tuesday. IBM also reiterated its earlier 2007 earnings forecast.

But analysts focused on the company's sluggish U.S. sales growth, and both Credit Suisse First Boston and Goldman Sachs downgraded the stock, Reuters reported. IBM (down $2.32 to $94.80, Charts, Fortune 500) fell 2.4 percent and was the Dow's worst performer.

Motorola (up $0.27 to $18.22, Charts, Fortune 500) reported a first-quarter loss Wednesday morning. But the results topped estimates, and shares rose.

Linear Technology (up $3.92 to $36.04, Charts) jumped 12.2 percent in active Nasdaq trading after the chip maker late Tuesday reported a drop in earnings that was in line with expectations and announced a $3 billion stock buyback plan.

Avanir Pharmaceuticals (up $3.92 to $5.19, Charts) jumped 308 percent in unusually active Nasdaq trading after the company reported positive late-stage trial results for its painkiller for people who have suffered nerve damage from diabetes.

In other news, Research in Motion (up $3.10 to $134.37, Charts) shares rose after the company said BlackBerry service had been restored to most users after an overnight service interruption.

Market breadth was negative. On the New York Stock Exchange, losers beat winners 9 to 7 on volume of 1.61 billion shares. On the Nasdaq, decliners topped advancers 4 to 3 on volume of 2.1 billion shares.

U.S. light crude oil for May delivery rose 4 cents to settle at $63.14 a barrel on the New York Mercantile Exchange in volatile trading after the release of the weekly oil inventory report.

COMEX gold for June delivery rose 80 cents to settle at $693.80 an ounce.

Treasury prices climbed, lowering the yield on the benchmark 10-year note to 4.65 percent from 4.68 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and yen and hit a 26-year low against the pound.

In other news, Merrill Lynch's April global fund manager survey showed most of those surveyed think stocks are still fairly valued even after the recent rally.

After plunging in late February on global growth concerns, stocks have bounced back in March and early April.

The money managers surveyed again said a global recession will be avoided but showed greater worry about the prospects for earnings growth over the next 12 months.