NEW YORK (Reuters) - The Dow and the S&P 500 closed at record highs on Thursday after Morgan Stanley and others reported better-than-expected earnings and Federal Reserve Chairman Ben Bernanke's comments further reassured markets.
Shares of Morgan Stanley (MS.N) jumped 4.4 percent to $27.70, its highest close since April 2011, after the bank posted a 42 percent increase in quarterly profit as stock trading revenue soared. The S&P financial index climbed 1.3 percent.
Of the 21 financial companies that have reported quarterly earnings so far, 76 percent have surpassed analysts' estimates, Thomson Reuters data showed.
UnitedHealth (UNH.N) shares rallied, buoying the Dow and other health insurers' stocks. UnitedHealth gained 6.5 percent to $70.55 after the company's results beat expectations. The Morgan Stanley healthcare payor index .HMO rose 3.1 percent.
Both the Dow and the S&P 500 also hit all-time intraday highs shortly after the opening bell. The Dow climbed as high as 15,589.40, while the S&P 500 set a record session high of 1,693.12.
Bernanke, speaking before the Senate Banking Committee, reiterated comments he made on Wednesday to the House Financial Services Committee. He stressed that the timeline for winding down the Fed's stimulus program was not set in stone.
"We got no negative surprises from the Fed chairman today, so the market liked that," said Bucky Hellwig, senior vice president of BB&T Wealth Management in Birmingham, Alabama.
Thursday's session marked the first time that both the Dow and the S&P 500 set intraday record highs since May 22. On that same day, the rally was interrupted when Bernanke hinted that the Fed planned to begin pulling back its stimulus. His comments triggered a sharp selloff, leading to a drop of nearly 6 percent in the S&P 500 over the next month.
The Dow Jones industrial average rose 78.02 points, or 0.50 percent, to end at 15,548.54, a record high. The Standard & Poor's 500 Index gained 8.46 points, or 0.50 percent, to a record close of 1,689.37. The Nasdaq Composite Index added 1.28 points, or 0.04 percent, to 3,611.28.
At Thursday's close, the benchmark S&P 500 was up 18.5 percent for the year.
Analysts' estimates for corporate earnings have been lowered so much that investors believe the low targets should be easily exceeded. Instead, investors probably will hone in on revenue figures and outlooks.
"Earnings have been pretty much coming in, in line with expectations," Hellwig said.
IBM (IBM.N) raised its full-year outlook and reported earnings that beat estimates, though the company's revenue missed forecasts. Shares of International Business Machines rose 1.8 percent to $197.99. IBM gave one of the biggest lifts to the S&P 500 and helped offset the impact of slides in Intel (INTC.O) and eBay (EBAY.O).
Intel, which limited the Nasdaq's gain, slid 3.8 percent to $23.24 after the world's biggest chipmaker cut its full-year revenue forecast. Shares of eBay fell 6.7 percent to $53.52 after the e-commerce company said full-year results would be at the low end of its forecast range.
There were more disappointing tech results after the bell. Shares of Google (GOOG.O) fell 4.9 percent to $865.73 following the release of its earnings, which reflected a drop in its online ad prices. Google ended the regular session down 0.9 percent at $910.68.
Microsoft shares also fell after the close. The stock was down 4.5 percent at $33.85 after it reported lower-than-expected quarterly earnings. Slow personal computer sales hurt its Windows business, Microsoft said.
Shares of Advanced Micro Devices (AMD.N) slid 3.5 percent to $4.48 in extended-hours trading following the chipmaker's results.
Analysts expect S&P 500 companies' second-quarter earnings to have grown 3.5 percent from a year earlier, with revenue up 1.1 percent, according to Thomson Reuters data. So far, 70.4 percent of all companies that have reported results have surpassed analysts' earnings expectations, while 49.4 percent have topped revenue views.
A meeting of Dell (DELL.O) shareholders to vote on founder Michael Dell's $24.4 billion offer to take the company private was adjourned to next week. Dell's stock rose 1.9 percent to $13.12.
The day's economic data signaled strength in the economy. New claims for U.S. jobless benefits fell by 24,000 last week to a seasonally adjusted 334,000, the lowest since early May. An index of factory activity in the Mid-Atlantic region increased in early July to 19.8, its highest level in more than two years, according to the Federal Reserve Bank of Philadelphia.
After the close, the city of Detroit filed for bankruptcy, the largest-ever municipal bankruptcy in U.S. history.
Volume was roughly 6.1 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, below the average daily closing volume of about 6.4 billion this year. On Monday, volume hit its lowest for any full trading day this year.
Advancers outnumbered decliners on the NYSE by a ratio of 2 to 1 in Thursday's session. On the Nasdaq, five stocks rose for every three that fell.
(Editing by Jan Paschal)