Market surges higher after upbeat earnings
NEW YORK » Wall Street rallied yesterday after better-than-expected quarterly results from JPMorgan Chase & Co.
and two other Dow Jones industrials raised investors' hopes that companies and the economy are indeed recovering from the protracted global credit crisis.
A market anxious about corporate earnings and their effect on the economy was relieved after JPMorgan Chase, Coca-Cola Co. and Intel Corp. all topped first-quarter projections.
The battered financial sector advanced after JPMorgan beat analysts' expectations despite a 50 percent drop in quarterly profit. The nation's third-biggest bank, which is in the process of acquiring ailing Bear Stearns Cos., reported $2.6 billion of write-downs tied to its loan portfolio.
Along with earnings results, Wall Street weighed sluggish economic reports on inflation and housing that were mostly within expectations. The Federal Reserve also released its Beige Book report, an outline of regional economic activity that pointed to widespread weakening amid a softening labor market.
But neither those factors nor a new trading high of $115.07 for a barrel of oil on the New York Mercantile Exchange damped the market rally.
Oil prices rose after a government report showed crude inventories fell unexpectedly last week, the second straight weekly decline. Light, sweet crude settled up $1.14 at a record $114.93 a barrel on the Nymex.
The Dow rose 256.80, or 2.08 percent, to 12,619.27. The index is up nearly 900 points from a low near 11,740, reached March 10.
Broader market indexes also gained. The Standard & Poor's 500 index rose 30.28, or 2.27 percent, to 1,364.71; and the Nasdaq composite index advanced 64.07, or 2.80 percent, to 2,350.11.
The Russell 2000 index of smaller companies rose 21.33, or 3.1 percent, to 713.39.
Advancing issues led decliners by a 5 to 1 basis on the New York Stock Exchange, where volume came to 4.1 billion shares compared with 3.49 billion shares traded Tuesday.
Bond prices fell as stocks looked more attractive. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.71 percent from 3.57 percent late Tuesday.
Gold prices rose, and the dollar was mostly lower against other major currencies.
Kevin Gaughan, portfolio manager and equity strategist at Wells Capital Management in Milwaukee suggested investors who had been myopically focusing on the U.S. consumer are rotating back to a more global view, and looking toward expanding markets overseas.
"The oil thing is certainly a global constraint on consumer spending, but you have so many more consumers coming into the marketplace via Asia and other places, the numbers there are a huge offset," Gaughan said.
In fact, Coca-Cola credited overseas growth with boosting its first-quarter profit 19 percent, despite weak results in North America. Coca-Cola shares rose 21 cents to $61.15 after its results came in well ahead of Wall Street expectation.
JPMorgan rose $2.84, or 6.7 percent, to $44.96 after issuing its quarterly report.
Intel rose $1.22, or 5.8 percent, to $22.13 after reporting late Tuesday that quarterly profit matched analysts' expectations and sales topped projections.