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International and domestic affairs combined to add strength to the markets at the fag-end of the earnings season. Benchmarks enjoyed their stay in the green for the third consecutive trading day, driven by strong gains in utilities, Microsoft’s plans to buy Skype, domestic economic data and China’s trade surplus.
The Dow Jones Industrial Average (DJIA) gained 0.4% to settle at 12,730.62. The Standard & Poor 500 climbed up 0.4% to end at 1,352.16, while the Nasdaq Composite Index gained 0.5% to finish the day at 2,856.18. On the New York Stock Exchange, Amex and Nasdaq consolidated volumes amounted to 6.6 billion shares and were below the average of 7.73 billion recorded until now in 2011. On the NYSE, for every four stocks that advanced, only one was on the declining side. The fear-gauge CBOE Volatility Index (VIX) dropped below 17.
Utilities enjoyed a strong upside yesterday, as investors banked on the prospects of rising profits and negated concerns about weakening demand. Considered to be a low-growth sector, utilities led the gains in the S&P 500 with a 1.3% rise yesterday, and the sector jumped 5.4% since April 8, 2011. The Dow Jones Utility Average also rose 1.4% and almost all of its components shared the cheer. Utility shares like American Electric Power Co., Inc. (NYSE:(AEP - Analyst Report), CenterPoint Energy, Inc. (NYSE:(CNP - Analyst Report), Duke Energy Corporation (NYSE:(DUK - Analyst Report), Edison International (NYSE:(EIX - Analyst Report), Exelon Corp. (NYSE:(EXC - Analyst Report), FirstEnergy Corp. (NYSE:(FE - Analyst Report), NiSource Inc. (NYSE:(NI - Analyst Report) and Public Service Enterprise Group Inc. (NYSE:(PEG - Analyst Report) gained 1.0%, 1.9%, 0.7%, 2.1%, 2.1%, 3.0%, 3.3% and 2.0%, respectively.
Microsoft’s announcement that it plans to buy internet phone service Skype dominated news from the tech sector. Microsoft Corporation (NASDAQ:(MSFT - Analyst Report) said it would pay $8.5 billion in cash to acquire the popular Internet phone service. This move provides Microsoft with a stronger footing in a space dominated by rivals Google (NASDAQ:(GOOG - Analyst Report) and Facebook. The board of directors of both companies have already approved of the deal. Shares of Microsoft were down 0.6%, while Skype’s stakeholder eBay Inc. (NASDAQ:(EBAY - Analyst Report) gained 2.5%.
A host of economic reports also chipped in to influence the movement of the markets. According to the Commerce Department, wholesale inventories jumped 1.1% in March, marginally higher than economists’ expectations. Additionally, sales jumped more than twice the expected number to 2.9%. Separately, the Labor Department reported a 2.2% increase in import prices, compared with economists’ expectations of a 1.8% jump which also marked the seventh consecutive month of gains. However, import prices increased at a slower pace in April, as rising food and fuel costs took their toll and slowed down from a 2.6% increase in March.
On the international front, China recorded its biggest trade surplus in four months in April, signaling an economic recovery. The world’s second largest economy reported a trade surplus of $11.4 billion in April, comprehensively surpassing expectations of a $3 billion surplus. The report also reflected the economy’s strength as it rebounded from a trade deficit in the first quarter. Additionally, China’s imports increased 21.8% and exports rose 29.9% on a year-over-year basis in April.
On the earnings front, Walt Disney Co.’s (NYSE:(DIS - Analyst Report) fiscal second quarter results failed to beat estimates and the company’s shares slid 2.4% after the closing bell. Disney's 49 cents per share for the quarter came in well below estimates. The company garnered $9.08 billion in revenues, marginally lower than the expected $9.13 billion. Interestingly enough, the company had led the blue-chips higher during the trading session, ahead of its earnings results and had gained 1.9%. Strong quarter results from Activision Blizzard, Inc. (NASDAQ:ATVI), which was released on Monday after the closing bell, helped lift the stock 0.7% yesterday. Also, better-than-expected results from Dean Foods Co. (NYSE:DF) boosted its shares by 11.5% which finally settled at $12.24.