Tech sector takes the lead following strong results from Amazon.com (AMZN) and Microsoft (MSFT). Financial stocks are also in the news following comments from Fed Chairman Bernanke and earnings from American Express (AXP) and Capital One Financial (COF). Stocks in Asia rallied sharply last night following the lead of the U.S. and shares in Europe are also higher this morning despite news that the U.K. economy shrank for the sixth straight quarter.

GDP in the U.K. fell 0.4 percent in the third quarter when economists were looking for a gain of 0.2 percent. Nonetheless, the FTSE index is up 1.5 percent following the lead of the U.S. and gains in bank stocks.

Fed Chairman Bernanke spoke this morning about the need to regulate large banks. Mr. Bernanke noted that steps need to be taken to make sure banks hold adequate capital. The Fed Chairman also told Congress that they need to "take action to reduce the probability and severity of any future crisis." Mr. Bernanke sees the need for regulations to be reformed so that banks do not have an incentive to become too big to fail. Bank stocks are flat in early trading with many of these stocks seeing strong gains ahead of and following earnings.

AXP shares are higher Friday by more than one percent after the financial firm reported strong earnings. EPS came in at 44-cents, 6-cents above expectations. Revenues did fall 16 percent, but at $6.02 billion, sales came in above the consensus of $5.92 billion. The company stated that despite continued worries about unemployment levels, there are signs of improvement in credit quality and the economy as a whole. AXP shares moved to a new 52-week high this morning when the stock broke through $36.50.

COF shares are seeing sharp gains Friday, up 10 percent to a price near $42.25. The credit card issuer reported earnings of 94-cents a share, 80-cents above expectations. Revenues were up 11.7 percent to $4.6 billion, above expectations for revenues of $4.11 billion. COF shares are up sharply from their March lows near $8, seeing a fivefold gain.

Tech stocks are leading the way Friday thanks to Microsoft and Amazon. Both tech giants blew past estimates, pushing their respective stocks up nicely. MSFT shares are up nearly 10 percent after the software company reported EPS of 40-cents a share, 8-cents above expectations. Sales did fall 14 percent, but revenues were also above estimates. The stock could also be seeing strength from the release of its Windows 7 product yesterday. The stock is trading just below $29 after touching its 52-week high at $29.35 intraday.

Amazon shares are up a remarkable 22 percent this morning at a price near $114. Amazon shares have been on a role this past year, up 125 percent even before today's huge gains. The online retailer beat earnings estimates by 12-cents a share with revenues up 27.8 percent to $5.45 billion, well above the $5.03 billion expected. Unlike eBay (EBAY), Amazon raised its guidance for the holiday shopping season.

Jody Osborne
Senior Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site

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