Stocks Jump, Led by Industrials; GE Gains

Stocks rose sharply Friday, led by industrials, after investors digested through the results of the EU bank stress tests and embraced a handful of encouraging U.S. earnings reports from earlier this morning. GE jumped after the firm raised its quarterly dividend.

Investors initially showed a muted reaction following the results of the stress tests.

The Dow Jones Industrial Average soared more than 70 points, led by Verizon, General Electric and American Express , after rallying more than 200 points in the prior session.

The S&P 500 and Nasdaq were also higher. The CBOE volatility index, widely considered the best gauge of fear in the market, was above 24.

Seven out of the 91 European banks failed the test, including HRE in Germany, as well as a Greece's Atebank and Spain's Banca Civica, according to the organizers. Fewer banks failed than expected.

  • Watch Live: CEBS Stress Test Press Conference

Most US-traded shares of European banks Barclay's, UBS, BNPParibas and Deutsche Bank were mixed, but Royal Bank of Scotland and Bank of Ireland jumped almost 4 percent following the news.

However, some analysts questioned whether the tests were tough enough: Rochdale Securities analyst Dick Bove said stress tests don't work and the results of the stress tests are a net negative for Europe.

“You’re forcing banks to reduce their loans in order to meet this tier 1 capital guidelines, and in the process, you’re slowing down the economy," Bove told CNBC. “What the stress tests did was it lowered lending, reduced the growth in the economy and caused money supply to shrink.”

The euro pared earlier gains versus the dollarafter the new from the stress tests overpowered initial optimism on the health of several German banks.

Gold prices slid below $1,190 an ouncewhile oil prices also extended their losses, falling below $79 an ounce.

Shares of General Electric rose after the parent company of CNBC said its board approved a 20 percent dividend increaseand it extended its stock repurchase plan.

Meanwhile, Verizon shares jumped after the telecom-services provider beat earnings expectations and said it was optimistic about its full-year results but revenue fell as the firm continued to feel pinch of AT&T's exclusive contract with Apple for the iPhone.

Apple said the white version of the iPhone 4 will not be available until later this year. The company had originally said the white model would be available in late July.

McDonald's posted a profit that narrowly beat analyst estimates but the stock still fell as the numbers fell short of the inflated whisper numbers circulating around the Street.

But overall, there were some encouraging earnings reports this morning:

Ford shares jumped after the auto maker swung to a profit, blowing past expectations, and said it expects to deliver even better results next year.

Microsoft beat analyst estimates with its after-the-bell report Thursday but the stock fell. Goldman Sachs raised their price target on the tech giant to $32 from $31.

But Amazon shares tumbled more than 10 percent as the online retailer delivered earnings after the bell Thursday that fell short of estimates. In addition, at least three brokerages cut their price targets on Amazon.

Former Dow component Honeywell reported earnings of 60 cents a share, ahead of estimates, and raised its outlook.

SanDisk shares tumbled more than 8 percent after the chip maker delivered a disappointing outlook and amid news that its co-founder and CEO Eli Harari will retire at the end of this year.

Meanwhile, General Motors is expected to file for an IPO during the week of August 16, just after reporting its quarterly results.

On Tap For Next Week:

MONDAY: Chicago Fed national activity index; Texas manufacturing outlook survey; new home sales
TUESDAY: S&P/Case-Shiller home price index; business activity survey; consumer confidence survey; Chicago Fed Midwest manufacturing index; 2-yr note auction; Earnings from: BP, DuPont, Deutsche Bank, Aetna and Broadcom
WEDNESDAY: Weekly mortgage apps; advance report on durable goods; 5-yr note auction; Beige Book; Earnings from: Boeing, Comcast, ConocoPhillips, Sprint and Visa
THURSDAY: Weekly jobless claims; 7-yr note auction; Microsoft analyst meeting; Earnings from: AstraZeneca, ExxonMobil, Royal Dutch Shell, Kellogg, Motorola and Amgen
FRIDAY: First release of 2Q GDP; employment cost index; Chicago PMI; consumer sentiment; Earnings from: Chevron and Merck

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