Today: For the first time since early April, all three major U.S. stock indexes closed higher than large round numbers that have mostly eluded them. Also: Facebook takes late plunge on Wall Street as it moves toward online gambling, and Silicon Valley companies spend more time in court.
Wall Street returns to milestone numbers of year's first quarter
The three major U.S. stock indexes managed to close atop milestone numbers in the same session for the first time in more than four months Tuesday, as a long slog back from losses in the second quarter continues to show fruit on Wall Street.
The Dow Jones industrial average closed higher than 13,000 for the sixth time in the past eight trading sessions, and it was joined Tuesday by the Nasdaq, which closed higher than 3,000 for the first time since May, and the Standard & Poor's 500, which closed higher than 1,400 for the first time since April. All three closed higher than those numbers for the first time since the S&P began to drop in early April, on fears about the global economy. Wall Street's uneven nature has been on full display so far in 2012, as a
"The fear of things collapsing is going away," Tom Wirth, senior investment officer at Chemung Canal Trust, told Bloomberg News. "The recession, which everyone was concerned about a month ago, is not going to happen."
The most recent climb has been more of a slow roll, after gains in the first quarter broke records. For an example, take a look at the year-to-date movement of the tech-heavy Nasdaq composite index: In the first quarter, as Apple (AAPL) was making its run to the top market capitalization in the United States, the index gained 18.7 percent to top 3,000 for the first time since the original dot-com bust. In the second quarter, however, it fell back 5.1 percent, with a strong end of June keeping it from even worse results. So far in the third quarter, however, the Nasdaq has gained at a more manageable pace of 2.8 percent, with fewer large swings in either direction than earlier in the year.
The other indexes have similar stories, with the S&P increasing 12 percent and the Dow advancing 8.1 percent in the first quarter, followed by second-quarter dips of 3.3 percent and 2.5 percent, respectively. Daily gains have more resembled Tuesday's incremental increases -- the Dow gained 0.4 percent, The S&P 0.5 percent and the Nasdaq 0.9 percent -- than large leaps forward similar to Friday's post-jobs report surge, giving a positive "grind" to the market.
"There's no major corporate news out, no big economic headlines. You combine that with the prospect of potential action from the Federal Reserve, and it's helping the market grind higher," NorthCoast Asset Management head trader Frank Ingarra told the Wall Street Journal.
And if Wall Street can maintain positive momentum, even more investors will leave the bond market and rejoin the race for equity gains, some experts believe.
"There's still a fair amount of pessimism, but equities are so much more attractive than bonds that the dividend on Johnson & Johnson, for example, offers a better yield than the company's bonds," Advisory Research managing director Bruce Zessar told Reuters.
Facebook heads down as it starts on road toward online gambling
While the rest of the market found gains, social-media stocks struggled Tuesday, with Facebook leading the way despite announcing a move that could lead to more revenue for the Menlo Park company in the future.
The world's most popular social network took a sharp downturn on Wall Street in the last hour of trading -- after gaining through the morning session, it closed with a loss of 5.5 percent, at $20.72. The decline was surprising, as the only major news of the day involving the company was the introduction of online gambling to the company's platform in Great Britain, which could represent another path to revenue for the company.
"Real-money gaming is a popular and well-regulated activity in the UK and we are allowing a partner to offer their games to adult users on the Facebook platform in a safe and controlled manner," Facebook said in a statement.
The move could tip Facebook's hand if online gambling were to become legal in the United States, where prominent Facebook partner Zynga has already expressed interest in offering real-money gambling if lawmakers were to allow the practice, creating an avenue for big revenues for the two social-media companies to share.
Zynga had the best day of Silicon Valley's social-media companies Tuesday on Wall Street, gaining 2.4 percent despite accusations of shady accounting procedures and a direct challenge in the social-gaming sphere from e-tail giant Amazon.
The two hottest social companies, Yelp and LinkedIn, cooled off Tuesday: Yelp gained 1.6 percent, but LinkedIn fell 4.4 percent as analysts advised investors to hold on to the stock instead of buying it.
Apple, Google, Oracle and Kleiner Perkins continue in court
Bay Area lawyers are finding plenty of clients in Silicon Valley lately, thanks to tech companies' litigious ways. The most-watched trial of the moment pits Apple against Samsung in a patent battle focusing on the iPhone and Samsung's subsequent smartphones. In Tuesday's testimony, high-priced Apple experts took the stand to testify to the similarity between the iPhone's icons and those on Samsung's Galaxy lines of mobile devices.
"The overall collection of graphic features ... could be confusing to a consumer," graphic design expert Susan Kare said; she testified that the trial had brought her $80,000 in fees.
The case that held the spotlight before Apple-Samsung was Google (GOOG)-Oracle (ORCL), and that case jumped back into public view with an odd ruling Tuesday. The judge in the trial, which ended with a favorable result for Google, issued a ruling that demanded the two Silicon Valley heavyweights disclose any bloggers whom they paid to write coverage of the trail favorable to the company dishing out the duckets.
Also, famed venture-capital firm Kleiner Perkins officially appealed a verdict that steered Ellen Pao's much-publicized sexual harassment claim to a courthouse instead of the firm's preferred resolution of arbitration. Although arbitration is usually cheaper and faster -- not to mention more private -- the judge in the case noted that the venture firm does not have a blanket arbitration clause in place with its employees and partners.
Pao filed the suit in May, alleging that another junior partner who has since left the firm had pressured her into sex, then retaliated when she broke off their brief relationship. Pao said her complaints about it to senior partners — including John Doerr and Ray Lane — fell on deaf ears and that she was later punished with poor performance reviews.
Kleiner Perkins has denied the charges in no uncertain terms, accusing Pao, an Ivy League-educated electrical engineer and lawyer, of trying to blame others for her poor performance.
Silicon Valley tech stocks
Up: Tesla, Applied Materials, Electronic Arts (ERTS), Splunk, Palo Alto Networks, SunPower (SPWRA), Cisco (CSCO), Zynga, Juniper, Netflix (NFLX), eBay (EBAY), Symantec, Jive, Yelp, Oracle, Hewlett-Packard (HPQ), VMware
Down: Facebook, LinkedIn, Google, Apple, Gilead
The tech-heavy Nasdaq composite index: Up 25.95, or 0.87 percent, to 3,015.86
The blue chip Dow Jones industrial average: Up 51.09, or 0.39 percent, to 13,168.60
And the widely watched Standard & Poor's 500 index: Up 7.12, or 0.51 percent, to 1,401.35
Check in weekday afternoons for the 60-Second Business Break, a summary of news from Mercury News staff writers, The Associated Press, Bloomberg News and other wire services. Contact Jeremy C. Owens at 408-920-5876; follow him at Twitter.com/mercbizbreak.