NEW YORK – Big technology companies like Microsoft and Intel are making their biggest gains in years Friday as technology companies lead a stock market rally based on strong third-quarter reports. Amazon is surging on the back of its own results, while traditional retailers are seeing their stock prices plunge. Wall Street is also pleased that the U.S. economy grew more than expected in the third quarter.
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KEEPING SCORE: The Standard & Poor’s 500 index rose 18 points, or 0.7 percent, to 2,579 as of 1:30 p.m. Eastern time. That put the index on track for another record high. The Dow Jones industrial average climbed 19 points, or 0.1 percent, to 23,420. The Nasdaq composite soared 131 points, or 2 percent, to 6,688. The index, which has a large concentration of technology stocks, is making its largest gain this year. The Russell 2000 index of smaller-company stocks picked up 7 points, or 0.5 percent, to 1,505.
In its first estimate, the Commerce Department said the U.S. economy grew 3 percent between July and September even though the country was hit by two major hurricanes. That was better than expected, and experts predict the recovery effort after those storms will likely boost the economy in the fourth quarter.
TECH SURGE: Some of the biggest technology companies posted their quarterly results and investors liked what they saw. Alphabet had a stronger quarter than Wall Street expected and its stock jumped $52.23, or 5.3 percent, to $1,043.65, putting it on track for its best day in two years. Microsoft’s fiscal first-quarter revenue topped analyst estimates by $1 billion and the stock soared $5.58, or 7.1 percent, to $84.34, also its largest gain in two years. Intel, the world’s biggest chipmaker, made its biggest move in three years. It jumped $23.05, or 7.4 percent, to $44.40 after a positive forecast for the fourth quarter of the year.
Apple gained $5.15, or 3.3 percent, to $162.56 on reports of strong early orders for the $999 iPhone X.
Networking hardware company Gigamon climbed $2.33, or 6.4 percent, to $38.48 after Elliott Management agreed to buy the company for $38.50 a share, or $1.44 billion.
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AMAZONIAN STRENGTH: Amazon posted a big sales boost from its “Prime Day” promotion and its recent purchase of the Whole Foods grocery chain. It also gave an optimistic outlook for the holiday season. Its stock jumped $125.06, or 12.9 percent, to $1,097.49, its largest gain in two and a half years.
Other retailers fell after J.C. Penney cut its profit forecast, saying it’s been lowering prices to try clearing out unsold goods. Its stock lost 55 cents, or 15 percent, to an all-time low of $3.11. Rival Macy’s sank $1.43, or 6.7 percent, to $19.91.
Toy maker Mattel plunged after the company posted a huge third-quarter loss and said it will slash spending, partly because the bankruptcy of the Toys R Us chain is hurting its business. Mattel plans to cut $650 million in costs and said it will stop paying quarterly dividends. The stock lost $1.95, or 12.7 percent, to $13.42.
HEALTH HAVOC: Health care companies continued to slump following reports that Amazon is receiving state licenses allowing it to do business as a prescription drug wholesaler. Walgreens fell $2.39, or 3.6 percent, to $64.72. Prescription drug distributor McKesson fell $7.66, or 5.3 percent, to $135.88. Those losses came after steep declines on Thursday.
However, Jefferies and Co. analyst Brian Tanquilut wrote that Amazon appears to have taken out licenses to sell medical equipment, not drugs. Because the company would need to establish relationships with pharmacy benefits managers and health insurers to distribute drugs, he said the company may stick to medical devices and over-the-counter medications for now.
Health care products supplier Henry Schein skidded $3.89, or 4.8 percent, to $77.58 and Patterson Cos. fell $2.46, or 6.2 percent, to $37.04.
CVS Health shed $4.34, or 5.9 percent, to $68.97 as investors considered the possibility it will buy health insurer Aetna. The Wall Street Journal reported on the deal talks Thursday, and the companies declined to comment. Aetna surged 11.5 percent Thursday on that news, but dipped $1.73, or 1 percent, to $176.87 on Friday.
ENERGY: Benchmark U.S. crude reached a six-month high as it jumped $1.08, or 2.1 percent, to $53.72 a barrel in New York. Brent crude, used to price international oils, rose 96 cents, or 1.6 percent, to $60 a barrel in London.
BONDS: Bond prices jumped. The yield on the 10-year Treasury note fell to 2.43 percent from 2.46 percent, a seven-month high.
CURRENCIES: The dollar fell to 113.95 yen from 114 yen. The euro slid to $1.1590 from $1.1657.
OVERSEAS: Germany’s DAX climbed 0.6 percent and the CAC 40 of France gained 0.7 percent. In Britain, the FTSE 100 rose 0.2 percent. The Spanish Ibex sank 1.5 percent after Catalonia’s regional parliament voted to secede from Spain, adding new tensions to the disagreement between the region and the central government in Madrid. Catalonia, which includes Barcelona, accounts for a fifth of the Spanish economy and Spain is deeply set against allowing it to become independent.
The Nikkei 225 of Japan jumped 1.2 percent and South Korea’s Kospi advanced 0.6 percent. Hong Kong’s Hang Seng index surged 0.8 percent.
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AP Markets Writer Marley Jay can be reached at http://twitter.com/MarleyJayAP His work can be found at https://apnews.com/search/marley%20jayt while Hong Kong’s Hang Seng index surged 0.8 percent.
