* Google and IBM both rally after reporting results
* Apple results due after market closes
* Coach shares plummet after weak quarterly sales
* Indexes: Dow up 0.5 pct, S&P up 0.09 pct, Nasdaq up 0.37 pct
By Chuck Mikolajczak
NEW YORK, Jan 23 (Reuters) - The Dow and Nasdaq advanced on Wednesday, lifted by IBM and Google whose stronger-than-expected profits helped to alleviate growing investor concern about the tech sector.
IBM’s and Google’s earnings, released after Tuesday’s close, were the latest reassuring fourth-quarter results that pushed the Dow and S&P 500 to five-year highs as worries about the “fiscal cliff” and euro zone debt crisis faded and earnings became the market’s main focus.
International Business Machines Corp forecast better-than-anticipated 2013 results and also posted fourth-quarter earnings and revenue that beat expectations.
Shares in the world’s largest technology services company climbed 4.9 percent to $205.71, its biggest advance since July, making it by far the largest boost to the Dow.
Worries about the profit potential in the tech sector had increased amid questions about waning demand for Apple Inc products and a weak outlook from Intel Corp last week.
Also helping to boost the tech sector was a 6.4 percent jump in Google Inc to $747.55. The Internet search company reported its core business outpaced expectations and revenue was higher than expected.
“That is kind of what got the Street’s attention - is that tech was considered an area of vulnerability and now seems to be actually be an area of real strength, and not just in terms of the fourth quarter, but in terms of guidance,” said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.
Despite a 1.1 percent gain in the S&P technology sector , gains on the broader S&P 500 index were limited a day after the benchmark index closed at a fresh 5-year high.
The recent gains have been largely fueled by a stronger-than-expected start to the earning season, pushing the benchmark S&P index near the 1,500 level, last reached on December 12, 2007, and may make additional gains harder to come by after a 4.6 increase for the month.
“It’s only reasonable to expect some sort of resistance when you get to that all-important level, the fact that here it is Jan 23 and we are brushing up against it, is really impressive,” Kenny said.
With tech earnings strong, Thomson Reuters data through Wednesday shows that of the 99 S&P 500 companies that have reported earnings so far, 67.7 percent have topped expectations, above the 62 percent average since 1994 and the 65 percent average over the past four quarters.
The Dow Jones industrial average gained 67.98 points, or 0.50 percent, to 13,780.19. The Standard & Poor’s 500 Index added 1.36 points, or 0.09 percent, to 1,493.92. The Nasdaq Composite Index rose 11.50 points, or 0.37 percent, to 3,154.68.
McDonald’s edged up 0.5 percent to $93.37 after reporting a rise in fourth-quarter earnings, lifted by an increase in same-store sales. Fellow Dow component United Technology Corp’s earnings fell from the prior year, hurt by large restructuring charges. Shares climbed 0.6 percent to $87.98.
On the downside, leather-goods maker Coach Inc plunged 15.48 percent to $51.31 as the S&P’s worst performer after reporting sales that missed expectations. The S&P consumer discretionary sector slipped 0.3 percent.
After the market closes, investors will scour Apple’s results, with the options market bracing for a big move in Apple shares after its earnings, amid a dramatic plunge for the world’s most valuable publicly traded company. Apple shares rose 0.4 percent to $507.04 on Wednesday.
Overall, S&P 500 fourth-quarter earnings rose 2.8 percent, according to Thomson Reuters data. That estimate is above the 1.9 percent forecast at the start of earnings season, but well below the 9.9 percent fourth-quarter earnings forecast on Oct. 1, the data showed.
Republican leaders in the U.S. House of Representatives began considering a Republican measure on Wednesday to extend the U.S. debt limit for nearly four months but many Democrats vowed to oppose the measure, calling it a gimmick that sets up a new “fiscal cliff.”