Better-than-expected results at Ford lift stocks

Investors set aside some of their worries about the economy Friday after quarterly results from Ford brought a glimmer of hope for the troubled auto industry.

Ford's loss wasn't as bad as analysts had forecast, and the No. 2 automaker used up much less cash during the first three months of the year than it did in the last quarter of 2008. The stock jumped 15 percent.

All the major indexes jumped more than 1 percent, including the Dow Jones industrial average, which advanced 130 points.

Better-than-expected results from American Express Co. and Microsoft Corp. also pushed stocks higher. The Dow Jones industrial average and the Standard & Poor's 500 index were close to breaking even for the week after six straight weekly advances.

The market's attention was also on potential news about the "stress tests" the government is giving 19 of the largest U.S. banks. Federal regulators will be doing private briefings with the banks on Friday on how the tests will work.

The tests are designed to determine which banks may need further help from the government, and Wall Street is expecting an announcement from Washington Friday afternoon about the guidelines that will be used in determining which banks are healthy enough to survive in an even worse economic environment.

Even though formal results won't be announced until May 4, investors expect that the disclosure on Friday of the methodology for the tests could shed light on which financial companies might need more support.

Robert Reynolds, chief executive at Putnam Investments, said Treasury Secretary Tim Geithner's statement Tuesday that "the vast majority" of banks have enough capital hints that the market likely won't be surprised by the grades banks bring home from the stress test.

"I think it will confirm what the market thinks," he said, adding that banks are still troubled and will need time to repair their balance sheets. "I don't think that by any stretch of the imagination it means that we're out of woods."

In midday trading, the Dow rose 129.66, or 1.6 percent, to 8,086.72.

Broader stock indicators also jumped. The Standard & Poor's 500 index rose 13.43, or 1.6 percent, to 865.35, and the Nasdaq composite index rose 35.52, or 2.2 percent, to 1,687.73.

Homebuilder stocks rose after the government reported that sales of new homes slipped last month but still topped expectations. New home sales fell 0.6 percent in March, better than the forecast of economists surveyed by Thomson Reuters.

Pulte Homes Inc. rose 58 cents, or 5.2 percent, to $11.75, while Lennar Corp. rose $1.34, or 15.5 percent, to $10.01.

The government also reported that demand for big-ticket manufactured items fell less than expected last month. Orders to U.S. factories for durable goods — those expected to last at least three years — fell by 0.8 percent, less than the 1.5 percent economists had been expecting. The report spurred some hope that a slide in manufacturing could be starting to bottom out.

Ford rose 72 cents, or 16 percent, $5.21 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 $3.16, or 15.1 percent, to $23.13 after the credit card lender reported earnings late Thursday that topped Wall Street's expectations, in part because of heavy cost-cutting. The company was by far the biggest gainer among the 30 stocks that form the Dow Jones industrials.

Microsoft rose $1.60, or 8.5 percent, to $20.52 as investors cheered cost-cuts that included layoffs. Profits fell 32 percent but were in line with Wall Street estimates.

Manufacturer 3M Co.'s earnings fell 48 percent as the recession squeezed sales in everything from health care to office supplies. The maker of Post-it notes and Scotch tape lowered its full-year profit forecast. 3M rose $1.79, or 3.3 percent, to $56.

Honeywell International Inc. fell 99 cents, or 3.1 percent, to $31.39 after the manufacturer's earnings fell 38 percent as a slide in commercial aviation and autos hurt sales. Honeywell also lowered its earnings forecast for the year.

The Russell 2000 index of smaller companies rose 9.59, or 2.1 percent, to 476.21.

About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 569.6 million shares.

Bond prices fell, pushing the yield on the 10-year Treasury note up to 2.98 percent from 2.93 percent late Thursday.

The dollar was lower against other major currencies, while gold prices rose. The weakness in the dollar meant each barrel of oil cost more. Light, sweet crude rose $1.89 to $51.51 even as supplies remain plentiful.

Overseas, Japan's Nikkei stock average fell 1.6 percent. In afternoon trading, Britain's FTSE 100 rose 2.4 percent, Germany's DAX index rose 2.6 percent, and France's CAC-40 rose 2.6 percent.