Earnings reports extend stock rally

The Dow Jones industrial average rose 17.15, or 0.2 per cent, to close on Friday at 9,171.61

Stocks have added to an already impressive run as another round of earnings reports gave investors new reasons to be optimistic about the economy.

The Dow rose 84 points and the Nasdaq composite index traded above 2,000 for the first time since October.

According to preliminary calculations, the Dow Jones industrial average rose 83.74, or 0.9%, to close on Thursday at 9,154.46 after being up as much as 176 points earlier in the day.

The Standard & Poor's 500 index rose 11.60, or 1.2%, to 986.75. It rose to nearly 997 during the day. It has not traded above 1,000 since November.

The Nasdaq advanced 16.54, or 0.9%, to 1,984.30. It rose to nearly 2,010 in morning trading, its first move above 2,000 since October 3. The index is up 56% from its low of 1,269 in March.

The latest reports struck on a theme that has played out for weeks: times are tough but companies are not doing as badly as had been feared. Many have chopped costs to produce profits well beyond the market's modest expectations.

Motorola Inc said it used deep cost cuts to wring a profit from its latest quarter. Analysts had expected a loss. Goodyear Tire & Rubber's shortfall was half what had been expected and Dow Chemical Co's chief executive said he believes the US economy "has found bottom".

A surprise drop in the number of people continuing to seek unemployment benefits gave investors even more reason to put money into stocks.

Analysts said the end of the month is pressuring money managers and traders to show they have kept up with July's steep rally. Often, the summer months are quieter than the rest of the year on Wall Street as traders take holidays. Some of the buying is likely tied to short-covering, where investors have to buy stock after having earlier sold borrowed shares in a bet they would fall.

"People kind of got caught a little flat-footed here. The summer is supposed to be slow," said Jon Merriman, chief executive of Merriman Curhan Ford in San Francisco.