Google earnings, takeovers lift Wall St

July 28th, 2011 | by Matew Dow |

US stocks rose on Friday after a blockbuster earnings report from Google and a pair of multibillion-dollar takeover bids helped overshadow the debt-ceiling debacle in Washington.

The Dow Jones Industrial Average gained 42.61 points (0.34 per cent) to close at 12,479.73.

The broader S&P 500 climbed 7.27 points (0.56 per cent) to 1,316.14, while the tech-heavy Nasdaq Composite rallied 27.13 points (0.98 per cent) to close at 2,789.80.

Google pushed up the Nasdaq, rising 13.0 per cent after it reported late on Thursday that its second-quarter net income climbed to $2.51 billion on record-high revenue of more than $9 billion.

US billionaire investor Carl Icahn made an unsolicited offer to buy Clorox in a deal valued at $12.6 billion, pushing Clorox stock up 8.9 per cent.

In another major deal, Anglo-Australian mining giant BHP Billiton unveiled a $12.1 billion takeover of US natural gas firm Petrohawk Energy Corp, leading Petrohawk’s shares to skyrocket 62.5 per cent.

The Google, Clorox and Petrohawk news “certainly set a positive tone to start the day”, said Michael James, senior equity trader with Wedbush Morgan Securities.

“There are still unresolved issues in Europe regarding the sovereign debt issues and the debt ceiling talks (in Washington). It is going to be a weight on the market limiting upside until it gets resolved,” James added.

US President Barack Obama warned of economic “Armageddon” if Democrats and Republicans fail to reach a deal to raise the federal government’s debt limit to avert a potentially disastrous default by August 2.

Europe’s economic picture improved slightly after the European Union’s bank regulator announced that only eight of 91 banks had flunked the latest round of stress tests, fewer than expected.

Shares of Citigroup sank 1.6 per cent after the banking giant released its second-quarter earnings.

Citigroup’s net income increased to $3.3 billion in the April-June period, up 24 percent from the same period last year but its stock sank after the company said its expenses this year would be higher than forecast.

Toy-maker Mattel, creator of the Barbie doll, gained 1.9 per cent after reporting that second-quarter net income grew 56 per cent from the same period last year.

Bond prices were mixed. The yield on the 10-year Treasury fell to 2.91 per cent from 2.94 per cent late Thursday, while that on the 30-year bond climbed to 4.25 percent from 4.24 per cent.

Bond prices and yields move in opposite directions.

Financial Solutions