Dow, S&P 500 Eke Out Gain for Week

The major U.S. equity averages soared Friday as investors cheered in-line China gross domestic product data, a mild read on domestic inflation and a better-than-expected earnings report from JPMorgan Chase(JPM).

A weaker-than-expected initial read on consumer sentiment in July was getting short shrift as traders bid up the broad market for the first time in more than a week. The Dow Jones Industrial Average rose 204 points, or 1.62%, to close at 12,777. The blue-chip index snapped a six-day losing streak and managed to finish the week with a 0.04% gain. Year-to-date, the Dow is now up 4.6%. Breadth was extremely positive within the Dow with 29 of the index's 30 components on the rise, led by a nearly 6% jump for JPMorgan, which easily topped Wall Street's profit view for its fiscal second quarter despite absorbing a $4.4 billion loss from its previously disclosed bad credit derivatives trade. Other top performers among the blue chips included Bank of America(BAC), Caterpillar(IBM), Microsoft(MSFT) and United Technologies(UTX). The only decliner in the Dow was Hewlett-Packard(HPQ), which fell 2%. The S&P 500 leapt 22 points, or 1.65%, to settle at 1357, snapping its own six-session losing streak. The S&P 500 closed the week up 0.17% and now sports a 7.9% advance for 2012. The Nasdaq, which ended a five-day skid, surged 42 points, or 1.48%, to close at 2908. The tech-heavy index lost 1% for the week and is now up 11.6% year-to-date. Conglomerates, financials, transportation and capital goods were the strongest sectors in the broad market. The KBW Bank Index jumped 3.3%. A solid report fromWells Fargo(WFC) was also a factor. The San Francisco-based bank reported second-quarter earnings of 82 cents a share on revenue of $21.29 billion, beating the average analysts' profit estimate by a penny. The stock gained 3%. In global economic news, China's National Bureau of Statistics said the country's economic growth fell to 7.6% in the second quarter year-over-year, the slowest rate of growth since the first quarter of 2009 and marking the sixth straight quarter of declines, which was as expected. Capital spending and domestic consumption helped promote growth but exports weighed down the overall figure.

"The official report contained a piece of good news, which was that quarterly growth quickened to 1.8% quarter-over-quarter from 1.6% in Q1, which was stronger than median expectations," said Klaus Baader, senior economist at Societe Generale. "While not too much emphasis should be placed on this, it may be a sign that growth has already bottomed in Q1."

"Our forecast remains that the Q2 annual growth rate is likely to mark the low in the current cycle, and that thanks to both monetary and fiscal stimulus Q3 growth will strengthen to around 8%," he continued. The FTSE in London rose 1% and the DAX in Germany was higher by 2.2% as the European markets rallied in response to the China data and good demand at an Italian bond auction outweighed a Moody's credit rating downgrade of Italy. Hong Kong's Hang Seng Stock index closed up 0.35% and the Nikkei finished flat.In U.S. economic news, the Labor Department reported that the producer price index rose by 0.1% in June after falling 1% in May, which was better than the decline of 0.5% that economists surveyed by Thomson Reuters were expecting for last month. The core figure rose 0.2%, as expected, after increasing by the same amount previously. "The combination of a benign inflation backdrop and large amount of slack in labor markets leaves the Fed free to maintain its highly stimulative policy stance with a move to further easing through additional asset purchases still possible should conditions deteriorate further," said Nathan Janzen, an economist at RBC Economics, who viewed the gains in the wholesale price index as mild. The University of Michigan consumer sentiment index was a disappointment, coming in at 72 vs. an expectation for a reading of 73.4. August crude oil futures rose $1.02 to settle at $87.10 a barrel. August gold futures popped $26.70 to settle at $1,592 an ounce. The benchmark 10-year Treasury fell 5/32, lifting the yield to 1.491%, while the dollar was down 0.35%, according to the dollar index.

Elsewhere in corporate news, Lexmark(LXK) was a big mover to the downside after the company lowered its second-quarter outlook on Thursday, citing a "weaker than expected demand environment, particularly in Europe, and a larger than expected impact from unfavorable changes in currency exchange rates."

The Lexington, Ky.-based printer maker now sees earnings excluding items of 87 to 89 cents a share for the June-ended period, below a previous guidance for a profit of 95 cents to $1.05 a share. The company expects revenue to decline 12% in the quarter from year-ago levels vs. a prior forecast for a 7-to-9% decline on the top line. The stock was down nearly 16%.

2012 Stock Predictions and Outlook

Your one-stop shop for 2012 stock recommendations and market predictions.

>To contact the writer of this article, click here: Andrea Tse. >To order reprints of this article, click here: Reprints