Verizon's earnings boost stocks broadly
NEW YORK » Solid earnings fromVerizon Communications Inc. lifted stocks yesterday, sending the Dow Jones industrial average to its best close in six years even as oil prices neared an all-time high.
Blue chip Verizon helped the Dow to its gains after saying its profit before special items topped Wall Street estimates. Elsewhere, Sirius Satellite Radio Inc. posted a smaller-than-expected loss amid sharp subscriber gains.
There were no new economic reports. On Monday, data on consumer spending and industrial activity showed the economy is expanding at a healthy pace, but comments from Federal Reserve Chairman Ben Bernanke reignited interest rate concerns and triggered a late-day selloff.
With the Fed saying it could be near the end of its rate tightening, investors have become sensitive to any inflation signs that might lead to further increases in short-term lending rates. Record energy and metals prices have some analysts questioning whether the central bank has done enough to stem inflation.
"After all of these increases, we're really at a point of watchfulness to see if the rate hikes have been sufficient or too much," said Susan Malley, chief investment officer ofMalley Associates Capital Management. "There are fears in both directions."
The Dow rose 73.16, or 0.64 percent, to 11,416.45, its best close since finishing at 11,489.59 on Jan. 19, 2000. The Dow is 2.6 percent off a record high of 11,722.98 from Jan. 14, 2000.
Broader stock indicators also advanced. The Standard & Poor's 500 index gained 8.02, or 0.61 percent, to 1,313.21, and the Nasdaq composite index added 5.05, or 0.22 percent, to 2,309.84.
Crude futures rose 91 cents to settle at $74.61 a barrel -- oil reached a record $75.17 per barrel in late April -- on the New York Mercantile Exchange as traders worried that tension over Iran's nuclear weapons program could lead to a supply cutoff from the key exporter.
Without any news on inflation or interest rates to consider, the latest batch of earnings reports gave investors more confidence about the strength of corporate profits and lent support to the market's advance, said Brian Gendreau, investment strategist forING Investment Management.
"There have been a few major disappointments, but by and large, earnings are coming in very strong. More than two-thirds of companies are reporting higher than expected," Gendreau said. "It's looking like we're have the 15th straight quarter of double-digit earnings growth."