- The Washington Times - Saturday, April 25, 2009

NEW YORK | Investors set aside some of their worries about banks and the economy Friday after the government unveiled its methods for testing the health of banks.

The Federal Reserve report was light on details, but didn’t bring any bad news. Investors were also pleased about quarterly results from Ford Motor Co., American Express Co. and Microsoft Corp.

Those developments cleared the way for a 119-point gain in the Dow Jones Industrial Average, leaving it down slightly for the week. The Dow and the S&P 500 broke their six-week winning streak, but the Nasdaq extended its string of weekly gains to seven.

The Fed, in outlining the tests’ methodology, said the 19 companies that hold one-half of the loans in the U.S. banking system won’t be allowed to fail - even if they fared poorly on the stress tests.

Separately, bank executives were being briefed on their test results in meetings across the country. By law, the banks cannot publicize the results without the government’s permission, but Wall Street buzzed with anticipation and most financial stocks rose.

“There are no major shocks in here. That’s why the market’s holding up well,” said Scott Fullman, director of derivatives investment strategy for WJB Capital Group. “It’s been hanging over the market for the last few days.”

The Dow rose 119.23, or 1.5 percent, to 8,076.29, after rising by as many as 170 points earlier in the session.

Broader market measures also advanced. The Standard & Poor’s 500 index rose 14.31, or 1.7 percent, to 866.23, and the Nasdaq composite index rose 42.08, or 2.6 percent, to 1,694.29.

Steve Sachs, director of trading at Rydex Investments in Rockville, said the stock market has held up well during a week in which about a quarter of the companies in the S&P 500 index released earnings, including the major banks.

“We are looking for the signs of economic recovery,” he said. “The market clearly is comfortable that it sees the signs of economic stability that it needs to see.”

In earnings news, Ford rose 51 cents, or 11 percent, to $5 after reporting that it spent $3.7 billion more than it brought in during the quarter. That amount is far less than the $7.2 billion the company went through in the fourth quarter.

American Express jumped $4.33, or 20.7 percent, to $25.30 after the credit card lender reported earnings late Thursday that topped Wall Street’s expectations, in part because of heavy cost-cutting.

Microsoft rose $1.99, or 10.5 percent, to $20.91 as investors cheered cost cuts that included layoffs. Profits fell 32 percent but were in line with Wall Street estimates.

Amazon rose $3.85, or 4.8 percent, to $84.46 after the online retailer’s first-quarter earnings and sales came in ahead of expectations as consumers still spent on books, DVDs and electronics despite the recession.

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