Filed under: General Electric, Earnings, Market News, Mergers & Acquisitions, Stocks
NEW YORK -- U.S. stocks ended a strong week with a broad rally on Friday as investors lauded GE's decision to divest most of its high-risk GE Capital business and repurchase up to $50 billion of its shares.
All 10 primary S&P 500 sectors ended up on the day but the S&P Industrials index, driven by gains in GE shares, was by far the best performer and rose 1.5 percent.
General Electric (GE) rose 10.8 percent to $28.51, hitting its highest level since September 2008 after it said there was potential to return more than $90 billion to investors through 2018.
This is indicative of a broader trend, a refocus on shareholders, and that can provide a support for markets.
"This is indicative of a broader trend, a refocus on shareholders, and that can provide a support for markets," said David Lebovitz, global market strategist for J.P. Morgan Asset Management in New York. "If we continue to see buybacks and higher dividends, and I suspect we will, that makes a more convincing case for equities going forward."
The Dow Jones industrial average (^DJI) rose 98.92 points, or 0.55 percent, to 18,057.65, the Standard & Poor's 500 index (^GSPC) gained 10.88 points, or 0.52 percent, to 2,102.06 and the Nasdaq composite (^IXIC) added 21.41 points, or 0.43 percent, to 4,995.98.
For the week, the Dow is up 1.6 percent, the S&P is up 1.7 percent and the Nasdaq is up 2.3 percent. Both the Dow and S&P notched their second straight week of gains, helped by a pickup in merger activity.
Earnings Season
Investors are looking ahead to the first-quarter earnings season. While some companies reported this week, next week will see results from a number major firms, including several banks. Profits of companies on the S&P 500 are projected to have declined by 2.9 percent in the first three months from a year ago, according to Thomson Reuters data.
"There's a bit of a rough patch ahead, but I think we should be able to jump over lower expectations," said Lebovitz, "I don't anticipate a sharp fall in stocks throughout the season."
Advancing issues outnumbered declining ones on the NYSE by 1,782 to 1,232, for a 1.45-to-1 ratio on the upside; on the Nasdaq, 1,603 issues rose and 1,100 fell for a 1.46-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting 26 new 52-week highs and no new lows; the Nasdaq composite was recording 93 new highs and 21 new lows.
About 5.47 billion shares traded on all U.S. platforms, according to BATS exchange data, down from the month-to-date average of 6.22 billion.
What to watch Monday:
- The Treasury Department releases the federal budget for March at 2 p.m. Eastern time.
