Dow finishes a record week

Blue-chip gauge sets mark for third straight session, nears 13,000 with 153-point gain; earnings help drive advance.

By Alexandra Twin and Steve Hargreaves, CNNMoney.com staff writers

NEW YORK (CNNMoney.com) -- The Dow industrials rallied to a record close Friday afternoon, finishing at a new high for the third consecutive day, after a slew of upbeat earnings reports that also drove the broader market higher.

The Dow Jones industrial average (up 136.85 to 12,945.48, Charts) jumped 153.35, or 1.2 percent, to 12,961.98, setting intraday and closing highs, according to early tallies. The Dow finished the week up about 2.8 percent higher.

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The broader S&P 500 (up 11.88 to 1,482.61, Charts) index also added about 1 percent and hit a fresh 6-1/2-year high. The Nasdaq (Charts) composite gained roughly 0.8 percent and hit a fresh 6-year high. The S&P gained about 2.2 percent for the week, and the Nasdaq rose about 1.4 percent.

Oil jumped nearly $2, the dollar gained on the euro and yen, and bonds held steady.

Here's what moved the markets Friday:

The Dow closed at a record Thursday despite a mixed broader market. But the tone was much more positive Friday, as all three major gauges spiked after solid earnings from Google, American Express, Caterpillar and others.

Beyond the earnings, the advance marked a broader recovery for Wall Street from the big late February selloff, when slumping Shanghai markets triggered a global stock decline on worries about growth. On that day, the Dow slumped 416 points - its biggest one-day loss since the day the markets reopened after the Sept. 11 attacks.

That threw a wrench into eight straight months of gains for stocks, part of the broader 4-1/2-year-old bull market. Trading grew more volatile as investors started worrying about economic growth and how the then emerging fallout in the subprime mortgage market would scar the broader economy. Analysts also began lowering earnings estimates.

But slowly, confidence seems to have returned, thanks to some encouraging economic news and the positive start to the earnings period.

"A lot of negativity had built up, with people finding a cloud in every silver lining, and so now you're seeing a reversal from that," said Douglas Roberts, managing principal at Channel Capital Research.

Roberts said both the recent economic news and outlook from the Federal Reserve seems to be that growth is slowing, but not at a pace to suggest a recession. Also, the fallout from subprime seems to be contained, he said.

Friday afternoon comments from Fed Governor Frederic S. Mishkin seemed to reiterate those views.

"The so-called Goldilocks scenario that Ben Bernanke laid out seems to be developing," Roberts said, referring to the not-too-cold, not-too-hot middle ground for the economy that stock investors prefer.

Nonetheless, stocks are likely to remain volatile in the months ahead, particularly in the typically difficult summer months.

With just over a fifth of the S&P 500 having reported, earnings are on track to grow 4.2 percent from a year ago, according to the latest Thomson Financial figures. That's a blended number that combines reported and expected results.

Of the companies that have reported so far, 65 percent have topped estimates, 17 percent have met forecasts and 17 percent have missed. Although the early results have been mostly better than expected, earnings are still on track to grow at the slowest pace in 3-1/2 years.

Among the latest to report, Google (up $11.62 to $483.27, Charts, Fortune 500) reported higher quarterly sales and earnings that beat estimates late Thursday, sending shares 3.3 percent higher Friday.

American Express (up $1.98 to $60.93, Charts, Fortune 500), a Dow component, also reported higher quarterly sales and earnings that topped forecasts late Thursday, and it rallied 2.5 percent Friday.

Friday brought earnings from four Dow components including Caterpillar (up $3.06 to $71.68, Charts, Fortune 500), which posted earnings and sales that beat forecasts and boosted its 2007 financial outlook. The stock jumped 4.5 percent.

Fellow Dow stock Honeywell (up $2.27 to $51.33, Charts, Fortune 500) reported higher quarterly sales and earnings that topped estimates and boosted its 2007 financial forecast. Honeywell climbed 5 percent.

McDonald's (down $0.49 to $48.29, Charts, Fortune 500) reported higher quarterly sales and earnings that met estimates and also said it will take a $1.6 billion charge in the second quarter. Shares lost 1.3 percent.

Pfizer (down $0.05 to $27.02, Charts, Fortune 500) reported lower quarterly profit, but adjusted earnings topped Wall Street estimates. Shares also edged lower.

Advanced Micro Devices (down $0.20 to $14.08, Charts, Fortune 500) reported a bigger-than-expected quarterly loss late Thursday, due to lower prices and unit shipments. Shares fell Friday.

Market breadth was positive and volume was improved from recent days. On the New York Stock Exchange, winners topped losers 3 to 1 on volume of 1.5 billion shares. On the Nasdaq, advancers topped decliners by more than 2 to 1 on volume of 1.78 billion shares.

U.S. light crude oil for May delivery rose $1.53 to settle at $63.38 a barrel on the New York Mercantile Exchange.

COMEX gold for June delivery rose $7.50 to settle at $695.80 an ounce.

Treasury prices were little changed, with yields on the ten-year note hovering around 4.67 percent

In currency trading, the dollar recovered a bit after hitting a two-year low versus the euro and inched higher versus the yen. Top of page

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Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.