Transcripts

The Dow Reaches For 13,000

SUSIE GHARIB: The Dow made a strong run at 13,000 today, closing at a new record high. The blue chip average surged 153 points to 12,961. The NASDAQ jumped 21 points. Powering today`s rally, another batch of strong earnings reports in corporate America, including better than expected earnings from Dow component Caterpillar and Honeywell. Even though only a quarter of S&P 500 companies have reported their earnings, Wall Street analysts are already boosting their growth projections. Scott Gurvey reports.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Wall Street`s earnings outlook was bleak when the season began. Analysts had dropped their year over year forecast to just 3.3 percent growth for the S&P 500. They were once looking for 9 percent. This week, they changed their mind again. As a long string of better than expected first quarter reports came in, analysts surveyed by Thomson First Call raised their estimates day by day with their consensus for earnings growth reaching 5.2 percent today. Michael Thompson, director of research at Thomson Financial, says he expects to see 7 percent growth by the time all the reports are in.

MICHAEL THOMPSON, DIRECTOR OF RESEARCH, THOMSON FINANCIAL: Expectations will (INAUDIBLE) lower. Analysts were very, very conservative. If you just look at the 130 plus companies that reported today on the S&P 500, that`s just over a quarter. It`s amazing because most of thosecompanies have beat on average past 10 percent on the earnings line and over 9 percent increase in terms of growth on the revenue line.

GURVEY: Expectations for the second quarter are still a low 3.5 percent. But analysts are looking to see a rapid acceleration in earnings growth as the year continues, reaching 12 percent in the first quarter of next year. For investors, strong earnings growth is the best predictor of market performance over the long term. Michael Metz, chief investment strategist at Oppenheimer, says a near-term correction is likely, but his long-run forecast is bullish.

MICHAEL METZ, CHIEF INVESTMENT STRATEGIST, OPPENHEIMER & CO.: You have sort of a synchronized boom in developed and developing nations and even though the U.S. slows down, worldwide this should be another great year and I think that`s being reflected in stocks. Remember, the big capitalization stocks in America are multinational. They really depend on growth as much overseas as domestically, so as far as their overseas operations and exports are concerned, the outlook is good almost regardless of the slowdown in the U.S.

GURVEY: Historically, earnings have grown at an average 7 percent rate, just about where Thomson First Call believes this quarter will end up. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.