Dow Jones swings back over 11,000
NEW YORK » Stocks rose smartly yesterday as stronger-than-expected earnings from FedEx Corp. and Morgan Stanley Inc. put investors' inflation fears on the back burner. The Dow Jones industrial average gained more than 100 points.
Morgan Stanley's second-quarter profit more than doubled from a year earlier and FedEx saw a 27 percent jump in its fiscal fourth-quarter earnings. The results quieted concerns about the possibility of an economic slowdown caused by rate hikes from the Federal Reserve.
"With the backdrop of rising interest rates, if we're still able to see good earnings for the second quarter, it will bode well for the market," said Jim Herrick, director of equity trading at Baird & Co.
Every sector except utilities was trading higher by the end of the session, with the energy and materials sectors seeing the most dramatic gains.
The Dow Jones industrial average rose 104.62, or 0.95 percent, to 11,079.46.
Broader stock indicators were also higher. The Standard & Poor's 500 index rose 12.08, or 0.97 percent, to 1,252.20, and the Nasdaq composite index rose 34.14, or 1.62 percent, to 2,141.20.
Advancers led decliners by roughly 3 to 1 on the New York Stock Exchange. Small cap stocks also rallied. The Russell 2000 index of smaller companies rose 13.17, or 1.94 percent, to 690.67.
Bonds were flat, with the yield on the 10-year Treasury note at 5.15 percent. The U.S. dollar fell against most major currencies. Gold prices were higher.
Crude oil futures were higher after the U.S. Department of Energy reported that gasoline inventories grew at a slow pace last week, despite high production levels. A barrel of light crude settled at $70.33, up 99 cents in trading on the New York Mercantile Exchange.
The day's trading was the latest in a series of rollercoaster sessions on Wall Street. Inflation jitters have been shaking stocks recently and May was Wall Street's worst month of the year by far, as investors sold off on fears the Fed would continue its streak of rate hikes. The major indexes swung to losses in early June before rebounding sharply last week.
"I think the correction we've had may have been overdone," said Ed Keon, chief investment strategist with Prudential Equity Group in New York. "If we get even the slightest bit of encouragement from the Fed and if earnings are as good as I think they'll be, this could be a pretty good summer for stocks."