Google trumps geopolitical risk

image credit: Carlos Luna

U.S. stocks rose, following the biggest drop since April for the Standard & Poor’s 500 Index, as a rally in Google Inc. (NASDAQ:GOOG) overshadowed concerns over crises in the Ukraine and Middle East.

Google jumped 2.7 percent after it posted revenue that exceeded analysts’ estimates. IBM fell 0.4 percent after reporting that revenue dropped for a ninth quarter. Advanced Micro Devices Inc. tumbled 18 percent as it forecast sales below estimates.

The S&P 500 gained 0.4 percent to 1,964.95 at 9:51 a.m. in New York, paring its loss for the week to 0.1 percent. The Dow Jones Industrial Average climbed 46.56 points, or 0.3 percent, to 17,023.37. Trading in S&P 500 companies was 59 percent above the 30-day average for this time of day.

“There will be a greater level of uncertainty in the market today with yesterday’s events in Ukraine,” Nick Skiming, who helps manage $10 billion at Ashburton Ltd., said in a phone interview from Jersey, in the Channel Islands. “But big names such as Google will provide some fill. The U.S. is in a good place right now, with positive results from several domestically-focused companies.”

The S&P 500 fell 1.2 percent yesterday on rising concern over tension in Ukraine and the Middle East. The benchmark gauge ended a string of 62 straight days without a gain or decline of more than 1 percent.

Jet crash

A Malaysian Airlines jet went down over eastern Ukraine, killing all 298 people on board, just a day after the U.S. and the European Union imposed further sanctions on Russia over the conflict. Russia and Ukraine blamed each other for the downing of the jet as moves to investigate the crash got under way. The United Nations Security Council will hold an emergency meeting over the incident today.

Stocks extended losses late yesterday after Israel began a ground operation in the Gaza Strip.

The Chicago Board Options Exchange Volatility Index, the gauge of S&P 500 options prices known as the VIX, rallied 32 percent yesterday, the most since April 2013, closing at 14.54, a three-month high. The VIX dropped 9.3 percent today to 13.19.

Equities have rallied this year amid better-than-estimated corporate earnings and central bank stimulus as the U.S. economy shows signs of recovering from a 2.9 percent contraction in the first quarter. The S&P 500 closed at a record on July 3 while the Dow reached an all-time high on July 16.

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