Dow continues record run

The Dow Jones Industrial Average closed at a record high above 12,800 points for a second straight day today as robust earnings news fuelled modest gains for blue chips in a mixed overall market.

Better-than-expected earnings from financial heavyweight Bank of America helped support the Dow, which managed a slight gain from a day earlier.

The benchmark Dow index finished up 4.79 points (0.04 per cent) at 12,808.63, notching up a fresh record close after striking 12,803.84 a day earlier.

The other US share gauges failed to keep pace, however.

The broad-market Standard and Poor's 500 index lost 1.77 points (0.12 per cent) to 1,470.73 while the tech-dominated Nasdaq composite index ended down 5.15 points (0.21 per cent) at 2,505.35.

Analysts said Bank of America's latest profits, which rose five per cent to a hefty 5.26 billion dollars, helped underpin the Dow as the first quarter earnings season continued apace.

The Dow had, however, opened lower in morning trading following tumbles on Asian share markets, particularly in fast-growing China were fears persist of a stock bubble.

"We think the reaction to today's news will be short-lived. Nonetheless, we would take a cautious approach for the next few days to see how the market handles the China news," said Gregory Drahuschak, a market analyst at Janney Montgomery Scott.

Investors refocused on corporate America's earnings calendar as the day progressed, finding support from Bank of America and better-than-expected profits from Merrill Lynch.

Excluding certain costs, Bank of America said its quarterly earnings per share struck 1.17 dollars, besting the forecasts of most Wall Street analysts who had anticipated earnings of 1.15 dollars per share.

"Bank of America is off to a solid start in 2007 despite a challenging operating environment," the bank's chairman and chief executive, Kenneth Lewis, said.

The bank's shares closed down 91 cents at 50.91 dollars in the wake of its earnings which were boosted by investment banking and trading income.

Merrill meanwhile unveiled first quarter profits of $US2.15 billion ($A2.57 billion), marking a hefty 352 per cent gain in earnings from the same period a year ago.

Earnings per share equated to 2.26 dollars as revenues leapt 24 per cent to 9.9 billion dollars.

Merrill's shares finished down 55 cents at 90.11 dollars.

Analysts said Yahoo's announcement of slowing profits on Tuesday had acted as a lingering drag on the Nasdaq, but tech darling Google might boost the sector's optimism when the market opens Friday.

Google reported today that its profits surged 69 per cent to one billion dollars in the first three months of the year as revenues at the world's leading internet search company soared.

Google said its net profit in the quarter tallied 1.0 billion dollars, or 3.18 dollars per share, compared to 592 million dollars, or 1.95 dollars per share, in the first quarter of 2007.

The search engine firm's shares were trading down 4.36 dollars at 471.65 dollars in after-hours trading.

Bond prices were mixed. The yield on the 10-year US Treasury bond rose to 4.670 per cent from 4.654 per cent, but that on the 30-year bond dropped to 4.836 per cent against 4.847 per cent. Bond yields and prices move in opposite directions.

source:www.theage.com.au