* Jobless claims drop to five-year low
* Apple shares drop after results
* Netflix jumps 40 percent after reporting profit
* Indexes: Dow up 0.62 pct, S&P up 0.38 pct, Nasdaq off 0.19
By Chuck Mikolajczak
NEW YORK, Jan 24 The Dow and S&P 500 advanced on
Thursday, with the benchmark S&P index moving through the 1,500
level as solid economic data enabled investors to shrug off a
steep decline in Apple shares.
Apple Inc dropped 10.1 percent to $462.17 after the
technology giant missed Wall Street's revenue forecast for a
third straight quarter as iPhone sales were poorer than
expected, fanning fears its dominance of consumer electronics is
The drop wiped out roughly $50 billion in Apple's market
capitalization to $435 billion, leaving the company vulnerable
to losing its status as the most valuable U.S. company to second
place ExxonMobil Corp, at $417 billion.
A trio of economic reports helped buoy the market, with data
showing a decline in weekly jobless claims and an increase in
manufacturing, while a gauge of future economic activity
"The S&P is up, that is a very important inflection point
that a stock such as Apple can take a hit and the market can
stay strong - that is because the U.S. economy is broadly
getting stronger across the board," said Mike Binger, portfolio
manager at Gradient Investment in Shoreview, Minnesota.
"Apple has been topping the headlines for the last three to
four years. That phase is obviously past us and people are
starting to talk about different stocks and they are gravitating
towards different stocks."
The gains marked the first time the S&P 500 had risen above
1,500 since Dec. 12, 2007 and put the index on pace for its
seventh straight advance.
The advance for the S&P, and muted declines in the Nasdaq in
spite of the decline in Apple, were viewed as a positive sign,
as investors take encouragement from an improving global economy
and move into stocks more closely tied to economic fortunes,
such as industrials.
General Electric rose 1 percent to $22.16 and United
Parcel Service gained 2 percent to $81.98. Of the 10
major S&P sectors, only technology, off 1.3 percent,
The Dow Jones industrial average gained 85.42 points,
or 0.62 percent, to 13,864.75. The Standard & Poor's 500 Index
gained 5.69 points, or 0.38 percent, to 1,500.50. The
Nasdaq Composite Index dropped 5.84 points, or 0.19
percent, to 3,147.83.
The domestic data was in sync with those overseas showing
growth in Chinese manufacturing accelerated to a two-year high
this month and a buoyant Germany took the euro zone economy a
step closer to recovery.
Apple's disappointing results drew a round of price-target
cuts from brokerages. At least 14 brokerages, including Barclays
Capital, Credit Suisse and Deutsche Bank, cut their price target
on the stock by $142 on average. Morgan Stanley removed the
stock from its 'best ideas' list.
In contrast to Apple, Netflix Inc surprised Wall
Street Wednesday with a quarterly profit after the video
subscription service added nearly 4 million customers in the
U.S. and abroad. Shares surged 36.9 percent to $141.36, its
biggest percentage jump ever.
Diversified U.S. manufacturer 3M Co reported a 3.9
percent rise in profit, meeting expectations, on solid growth in
sales of its wide array of products, which range from Post-It
notes to films used in television screens. The shares edged up
0.2 percent to $99.66.
Corporate earnings have helped drive the recent stock market
rally. Thomson Reuters data through early Thursday showed that
of the 133 S&P 500 companies that have reported earnings, 66.9
percent have exceeded expectations, above the 65 percent average
over the past four quarters.