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Wall St. rallies on comforting corporate profits
2008-04-16
Stocks vaulted higher on Wednesday after Intel Corp, JPMorgan Chase & Co and other blue chips reported earnings that reassured investors worried that a weak economy would sap corporate profits. All three major indexes ended up more than 2 percent. Solid results from JPMorgan and Wells Fargo & Co heartened investors who had been counting on the big banks to fare better than rivals in coping with the turmoil in the housing and credit markets. Technology stocks also had a strong day after Intel, the world's largest chip maker and a Dow component, affirmed its profit-margin target for 2008, soothing concerns about falling chip prices and a pullback in spending by businesses and consumers. The encouraging earnings news overshadowed some negative comments from the Federal Reserve on regional economic conditions and data that showed home building sank to a 17-year low. "Tech has been under pressure this year, so the Intel numbers were encouraging. And JPMorgan and Wells Fargo's results gave investors the feeling that perhaps we are at least past the halfway point of the financial problems," said Paul Nolte, director of investments at Hinsdale Associates, in Hinsdale, Illinois. The three major U.S. stock indexes had their best day since April 1. The Dow Jones industrial average jumped 256.80 points, or 2.08 percent, to close at 12,619.27, while the Standard & Poor's 500 Index rose 30.28 points, or 2.27 percent, to 1,364.71. The Nasdaq Composite Index surged 64.07 points, or 2.80 percent, to close at 2,350.11. Shares of JPMorgan shot up 6.7 percent to $44.96 on the New York Stock Exchange and ranked among the stocks giving the biggest boost to both the Dow and the S&P 500. Wells Fargo's stock climbed 4.3 percent to $29.01 after the No. 5 U.S. bank reported a narrower-than-expected decline in profit as solid revenue gains and lower expenses helped offset an increase in bad loans. An S&P index of financial shares rose 3.3 percent. Intel contributed the most to the S&P's advance, while it ranked second among the top-weighted stocks lifting the Nasdaq 100. Intel's stock climbed 5.8 percent to $22.13 on the Nasdaq. An index of semiconductor stocks gained 5.5 percent. Energy shares also gave a boost to the S&P 500 as the price of oil rose to an intraday record of $115.07 per barrel. On the New York Mercantile Exchange, the May crude oil contract also settled at a record $114.93 a barrel, up $1.14, or 1 percent. The S&P index of energy shares was up 2.7 percent. Exxon Mobil shares gained 2.3 percent to $92.89 and ranked among the top-weighted advancers in the S&P 500. Coca-Cola shares edged up 0.3 percent to $61.15 after its results topped estimates due to strong international sales. But most of the news on the economy was downbeat. The Federal Reserve said economic conditions were weakening across much of the United States while price pressures from food, fuel and raw materials were increasing. And the Commerce Department said housing starts dropped 11.9 percent in March to an annual rate of 947,000 units, the slowest pace since March 1991 and well below economists' expectations. Nevertheless, the government said the overall Consumer Price Index for March rose 0.3 percent, which was less than economists had forecast, leaving policy-makers room to cut benchmark interest rates further to ward off the housing-led slowdown. Trading was moderate on the New York Stock Exchange, with about 1.44 billion shares changing hands, falling short of last year's estimated daily average of roughly 1.90 billion, while on Nasdaq, about 2.13 billion shares traded, also below last year's daily average of 2.17 billion. Advancing stocks outnumbered declining ones by a ratio of about 5 to 1 on the NYSE and by 3 to 1 on Nasdaq. (Editing by Jan Paschal)
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