Investors See Silver Lining

Google and IBM rose Thursday on better than expected results, but the biggest surprise was that investors were willing to look past disappointing results from AMD and Merrill Lynch to bid shares of those companies higher too.

Stocks started lower Thursday morning, as strong earnings from IBM weren’t enough to overcome a bigger than expected loss at Merrill Lynch. But buyers soon stepped in on hopes that the worst of the credit crisis is over, sending the major indexes back to breakeven by the close and Merrill to a 4% gain.

The forgiving mood continued after hours, when AMD rose despite posting a wider than expected loss of 59 cents a share, as investors looked to better than expected gross margins of 42% as a sign that the company’s fortunes may be stabilizing. The company’s sales of $1.5 billion were in line with its lowered guidance earlier this month. AMD shares were up 2.5% after hours.

But Google fared even better, its shares soaring 17% to $525 after the company posted quarterly earnings of $4.84 a share and sales after traffic acquisition costs of $3.7 billion, both well ahead of estimates. It was Google’s first foray above $500 in two months.

Not all stocks fared well in Thursday’s trading session, however.

EBay slumped 3.5%, as flat growth in active users weighed on otherwise solid results.

Nokia plunged 14% after missing estimates, results that sent shares of supplier Texas Instruments lower by 3%. And Emcor Software tumbled after lowering guidance.

Check Point and Altera gained on their results, and Dell rose on a Gartner report showing PC market share gains.

Investors will have one more critical earnings report to get through this week, when Citigroup reports Friday morning. The banking giant has been at the heart of the nine-month credit market meltdown.

The Nasdaq slipped 8 to 2341, the S&P rose 1 to 1365, and the Dow added 1 to 12,620. Volume declined to 3.71 billion shares on the NYSE, and 1.86 billion on the Nasdaq. Decliners led by a few shares on the NYSE, and by a 17-11 margin on the Nasdaq. Upside volume was 52% on the NYSE, and 39% on the Nasdaq. New highs-new lows were 124-78 on the NYSE, and 50-111 on the Nasdaq.