NEW YORK – Stocks rose Friday, with the Dow and S&P reaching 2005 highs, as gains in semiconductors and Apple Computer Inc.'s (APPL) upcoming stock split offset the impact of personal computer giant Dell Inc.'s (DELL) disappointing fourth-quarter revenue outlook.
The Dow Jones industrial average (search) rose 50.24 points, or 0.47 percent, at 10,799.85. The Standard & Poor's 500 Index (search) closed up 8.76 points, or 0.73 percent, at 1,205.77. The Nasdaq Composite Index (search) ended up 23.59 points, or 1.15 percent, at 2,076.69.
For the week, the Dow rose 0.75 percent and the S&P 500 was up 0.20 percent, marking their third straight week of gains, while the Nasdaq was down 0.48 percent.
Year-to-date, the Dow is now positive for 2005 for the first time, edging up 0.20 percent. The Nasdaq Composite and the S&P 500 remain negative. Both the Dow and S&P reached intraday highs for the year.
"It's a very impressive rally and a very broad advance," said Al Goldman, chief market strategist at A.G. Edwards. "The Nasdaq is soaring, led by the hi-techs. After a few days of R&R, to have this type of strength is impressive, particularly coming before the weekend, with no particular great new fundamental news. It's an impressive day and I'd look for it to carry forward over the near term."
A flood of buy orders from institutional traders, impressed with the market's ability to hold on to last week's gains, pushed stocks higher. Analysts said the market has nearly recovered from January's selloff, but remain split on whether the market has the potential to continue its run upward.
"I admit, the market's acting better than I thought it would," said Ken Tower, chief market strategist for Schwab's CyberTrader. "The market was quite oversold over the past few days, and I think we're bouncing off of that. It remains to be seen, however, whether this can be maintained."
While earnings have been generally positive, investors have been quick to sell off stocks that fail to meet Wall Street's forecasts. That selling has overshadowed some of the market's fundamental strengths, according to Brian Belski, market strategist at Piper Jaffray.
"The current fundamental conditions, and leading conditions going forward, are really forcing portfolio managers to put money to work," Belski said. "I think the market is set up to exceed expectations for a while."
Apple, whose shares have almost quadrupled in value over the last year on the success of its iPod music player, announced a 2-for-1 stock split. Stock splits can boost sentiment broadly because they indicate a company's optimism about its future, and Apple's shares jumped 3.6 percent, or $2.85 to $81.21.
Semiconductor stocks, including Intel Corp. (INTC) and Applied Materials Inc. (AMAT) climbed, boosted by the idea that that sector is due for a rebound. Intel was up nearly 3 percent, or 67 cents, to $24.17, while AMD rose 2 percent, or 36 cents to $18.11.
Dell beat analysts' profit estimates by a penny per share, but its record quarterly sales were still lower than expected, and investors were further disappointed by a tepid outlook for the current quarter. Dell fell $1.58 to $39.99.
"The market is able to shake off the bad news from Dell. Obviously, Cisco and Dell haven't helped technology issues but the overwhelming consensus about earnings in the fourth quarter has been that results have been better than expected," said Arthur Hogan, chief market analyst, Jefferies & Co.
Pixar Animation Studios Inc. (PIXR) dropped $2.82 to $87.06 despite beating Wall Street's profit estimates by 14 cents per share. Earnings fell 34 percent from a year ago, when Pixar's "Finding Nemo" was first sold on DVD.
High-end gadget retailer Sharper Image Corp. (SHRP) tumbled $1.84, or 10.9 percent, to $15.10 after the company said its earnings for 2005 would be sharply lower than Wall Street expects, and that its loss for the current quarter would likewise be worse than forecast.
Dow component Pfizer Inc. (PFE) reportedly plans to slash $2 billion in costs, though widespread layoffs are not expected. The drug maker plans to reorganize its sales force as well, according to a report in The Wall Street Journal. Pfizer rose 10 cents to $25.15.
Verizon Communications Inc. (VZ) rose 27 cents to $36.31 after the Journal reported that the Dow component's acquisition talks with MCI Corp. (MCI) could be wrapped up in a few days. The deal is said to match Qwest Communications International Inc.'s (Q) $6.3 billion bid. MCI added 29 cents to $20.75, while Qwest slipped a penny to $4.15.
Earlier, traders said a rumor that North Korea's leader Kim Jong-il (search) was ousted in a coup briefly lifted stocks. A White House spokesman said he hadn't heard anything about it. CNBC said intelligence sources told NBC news that they were unaware of any evidence supporting the rumor.
Trading was active, with 1.56 billion shares changing hands on the New York Stock Exchange, above the 1.46 billion daily average for last year. About 2.17 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.
Advancers outnumbered decliners on the New York Stock Exchange by about 11 to 5 and by about 2 to 1 on Nasdaq.
The Russell 2000 index of smaller companies was up 7.95, or 1.3 percent, at 634.76.
Overseas, Japan's Nikkei stock average rose 0.7 percent. In Europe, Britain's FTSE 100 closed up 0.88 percent, France's CAC-40 gained 1.17 percent for the session, and Germany's DAX index climbed 1.05 percent in late trading.
Reuters and the Associated Press contributed to this report.