Quarterly earnings boost stock market

Associated Press

NEW YORK

The stock market closed out its best week in nearly two years on a positive note Friday, helped by strong quarterly earnings from Microsoft and other big U.S. companies.

After weeks of speculation over the fate of Europe’s economy, Ebola fears and plunging oil prices, investors were able to get back to basics. Wall Street is in the midst of one of the busiest times of the year, when companies report their quarterly results. Ultimately, what drives stock prices higher is the potential for a company to earn more, so higher profits generally mean higher stock prices.

“What matters most to the market are earnings expectations and corporate fundamentals, and so far they’re looking pretty good,” said Michael Arone, chief investment strategist at State Street Global Advisors.

Profits for S&P 500 companies are up 5.6 percent from a year ago this earnings season, according to FactSet. That growth is better than the 4.6 percent increase the market was expecting.

Quarterly results from Microsoft and UPS helped lift stocks Friday, but there have been other strong reports this week. Caterpillar, 3M, Apple and others all came in well above expectations.

Microsoft’s sales and profits were well above analysts’ expectations. Cloud services, a business the company has focused on, also grew. Microsoft rose $1.11, or 2.5 percent, to $46.13.

UPS also reported strong results and expects December shipments to rise 11 percent from a year ago. Many investors consider UPS a bellwether for how the U.S. economy is doing, particularly during the crucial holiday shopping season. UPS rose 11 cents, or 0.1 percent, to $100.59.

Investors were able to set aside dismal third-quarter results from Amazon. The online retailer’s stock took a beating, but that wasn’t enough to drag down the rest of the market.