Stocks mostly higher on strong corporate profits

NEW YORK -- Most stocks regained their winning form Friday thanks to better-than-expected profit reports from key bellwether companies such as longtime Dow Jones index members Microsoft, McDonald's and General Electric.

Good news on the global front, including word that the IMF was poised to get $430 billion to help battle widespread economic woes, also buoyed investors. An announcement to that effect came later in the day.

The Dow Jones industrial average closed up 65 points, ending at 13,029. The S&P 500 posted a 0.1% gain.

A third major market gauge, however, the Nasdaq, dropped, losing 0.2%.

Overseas, Germany's DAX was up 1.1%, and other major stock indexes were slightly higher. Britain's FTSE 100 closed 0.5% higher and the CAC-40 in Paris increased 0.4%.

A closely watched survey in Germany, the continent's economic powerhouse, showed business optimism rising for the sixth straight month. Most economists expected the index to decline.

A gauge of optimism six months ahead was also positive. Growth in Germany could help weaker nations in the 17-country eurozone as demand for their goods increases.

The world's leading economies are also set to pledge more than $400 billion in new resources to the International Monetary Fund, according to British Chancellor of the Exchequer George Osborne. The U.K., which has long resisted getting pulled into helping the eurozone, promised $15 billion in support.

The first-quarter earnings season, which kicked off last week amid low expectations, has proven to be far better than analysts had expected. Of the 121 companies in the Standard & Poor's 500 stock index that have reported quarterly results, 97 have topped expectations, according to S&P Capital IQ. The 80% "beat rate" is much higher than the 59% of companies that topped forecasts in the fourth quarter of 2011.

At the start of April, cautious Wall Street analysts were calling for year-over-year profit growth of less than 1% for S&P 500 companies. But that estimate appears to have been too conservative and is making it easier for Corporate America to top estimates and reassure investors that profit growth is in no danger of slowing dramatically. As of Friday, thanks to the early batch of better reports, companies in the S&P 500 are now on pace to grow earnings 4.4%.

"The bar was set low and companies have been exceeding expectations," says Andy Brooks, head trader at mutual fund company T. Rowe Price.

"Microsoft is a bellwether company," says Brooks. "If Microsoft is doing well it might imply that the economy is doing well because its products are used so broadly."

"The positive earnings numbers helped shift the sentiment in the market," says Quincy Krosby, market strategist at Prudential Financial.