Strong technology earnings boost Wall Street

NEW YORK (Reuters) - Stocks rose on Thursday, with the S&P 500 at a 2-1/2 month high as technology companies' outlooks and earnings overshadowed weak economic data.

So far corporate earnings have been beating analysts' lowered expectations. The latest to boost the market, especially tech shares, were IBM's raised full-year outlook, forecast-beating earnings from eBay and Qualcomm's expectations for a "strong December quarter."

But a slew of weaker-than-expected economic data capped gains in the wider market. Manufacturing in the U.S. mid-Atlantic region shrank for a third month and home resales were lower than forecast. Data also showed more Americans applied for unemployment insurance than expected in the latest week.

"Europe has been quiet and earnings news, while not earth-shattering is slightly better than expected," said Fred Dickson, chief market strategist at D.A. Davidson & Co. in Lake Oswego, Oregon. "A trading range environment is how we see it."

Recent lackluster data has had a limited impact on the market as investors increasingly expect the Federal Reserve to step up stimulus efforts, possibly as early as the end of July.

There were also some worrying earnings. Morgan Stanley fell 6.6 percent to $13.07 as quarterly revenue declined due to a slowdown in trading and dealmaking volumes. The company will cut 1,000 employees by the end of this year. The S&P financial index <.GSPF> fell 1 percent.

The Dow Jones industrial average <.DJI> gained 23.27 points, or 0.18 percent, to 12,931.97. The Standard & Poor's 500 Index <.SPX> rose 2.27 points, or 0.17 percent, to 1,375.05. The Nasdaq Composite Index <.IXIC> added 23.14 points, or 0.79 percent, to 2,965.74.

The S&P is at its highest level since early May. Some investors are pointing to a trading range between recent highs above 1,400 and a low in June around 1,280.

"People are focusing on individual stocks after earnings and trying to figure out (through) outlooks how weak the economy really is," said Giri Cherukuri, head trader at OakBrook Investments in Lisle, Illinois.

"It is baked into stock prices that growth is going to be slow for a little while,"

IBM shares jumped 3.8 percent to $195.44, making it the largest boost to the Dow industrials a day after it raised its full-year profit forecast.

Qualcomm cut its revenue and earnings forecast for the current quarter but investors took heart as it said sales would improve for a strong last quarter of 2012, sending its shares up 4.5 percent to $58.56.

EBay shares jumped 8.9 percent to $44.06 after it posted stronger-than-expected quarterly revenue and earnings as more consumers shopped on its online marketplaces and used its PayPal payment service.

Of the 20 percent of S&P 500 companies reporting earnings so far, 65 percent of companies have beaten expectations, slightly better than average since 1994, according to Thomson Reuters data.

U.S.-traded shares of Mellanox Technologies touched their life-time high after the chipmaker's profit beat analysts' expectations. Mellanox, up about 40 percent at $94.33, was the biggest boost to the PHLX semiconductor index <.SOX>.

Outside the tech sector, Textron shares rallied 9.6 percent to $26.05 after the world's largest maker of corporate jets, which also makes EZ-Go golf carts and industrial components, handily beat Wall Street forecasts.

Walgreen shares soared 10.8 percent to $34.32 and Express Scripts Holding added 1.2 percent to $58.40 after the companies said they struck a pharmacy network agreement that settles a long-running dispute.

Walgreen competitor CVS Caremark fell 5.9 percent to $45.57.

Shares of Johnson Controls , the battery and auto interiors company, tumbled 6.5 percent to $26.47 after it posted a lower-than-expected quarterly profit and cut its outlook for the current period.

Google shares rose 2.5 percent to $595. The company was scheduled to report earnings after the market's closing bell.

(Editing by Kenneth Barry)

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