Street surges after upbeat earnings report
EmptyNEW YORK -- Wall Street rallied Wednesday 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 recovering from the country's protracted credit crisis. The blue chip index rose more than 170 points.
Investors anxious about corporate earnings and their impact on the economy were relieved after JPMorgan, Coca-Cola Co., and Intel Corp. all topped first-quarter projections. The three companies are among dozens of others that will post quarterly results Wednesday.
The battered financial sector advanced after JPMorgan reported profit fell 50% because of tight credit markets, but still beat analysts' expectations. 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.
"You have a combination of JPMorgan and all these other strong earnings out there from a broad range sectors, and that's helping the buying we're seeing," said Todd Salamone, director of trading and vice president of research at Schaeffer's Investment Research. "There's an unwinding of all the negativity that we saw ahead of the earnings season."
Salamone and other analysts have been hoping that strength in corporate earnings would act as a catalyst for a significant rally; the market has managed a choppy assent since hitting lows in early March. Investors have been growing more confident in recent weeks that the Federal Reserve's efforts to boost the economy and the troubled credit markets are working.
In addition to earnings reports, Wall Street weighed sluggish economic reports on inflation and housing that were mostly within expectations. The Federal Reserve will also release its Beige Book assessment of regional economies later in the day.
In late morning trading, The Dow rose 177.58, or 1.44%, to 12,540.05. The index is up more than 700 points from its lows near 11,740, reached March 10.
Broader indexes also gained. The Standard & Poor's 500 index rose 19.17, or 1.44%, to 1,353.60; and the Nasdaq composite index added 47.59, or 2.08%, to 2,333.63.
Bond prices fell as stocks looked more attractive. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.62% from 3.57% late Tuesday.
Oil prices -- which crossed $114 for the first time on Tuesday -- rose after a government report showed crude-oil inventories fell unexpectedly last week for the second straight period. Light, sweet crude added 50 cents to $114.29 a barrel on the New York Mercantile Exchange.
Gold prices rose, and the dollar was mostly lower against other major currencies.
In corporate news, JPMorgan rose $2.07, or 4.9%, to $44.23 after issuing its quarterly report. Chief Executive Jamie Dimon said the company is well capitalized and has enough liquidity to handle difficult market conditions, but did not call an end to the credit crisis like other bank CEOs have in recent weeks.
Bank of America Corp. rose $1.22, or 3.4%, to $36.81, while Wells Fargo Corp., which also beat earnings expectations, rose $1.94, or 6.9%, to $29.75.
Dow component Intel rose $1.25, or 6%, to $22.16 after reporting late Tuesday that quarterly profit matched analysts' expectations and sales topped projections. Intel also issued a forecast that kept profit-margin predictions for 2008 intact.
Meanwhile, Coca-Cola reported first-quarter profit of 19% on a 21% increase in sales. Results from the Dow component easily surpassed Wall Street expectations, but shares fell 23 cents to $60.70.
Government data showed that consumer inflation pushed higher last month as increases in energy, food and airline tickets overwhelmed the biggest drop in clothing prices in nearly a decade. The Labor Department reported consumer prices rose 0.3% in March after being unchanged in February.
Core inflation, which excludes food and energy, posted a 0.2% rise. Both the overall increase and the rise in core prices were in line with analysts' expectations.
Meanwhile, home construction plummeted during March to its lowest level in 17 years, the government said in a report signaling that the housing sector will continue slumping. Housing starts decreased 11.9% to a seasonally adjusted 947,000 annual rate, after falling 0.7% in February to 1.075 million, according to the Commerce Department.
The Russell 2000 index of smaller companies rose 16.16, or 2.34%, to 708.22.
Advancers led decliners by a 3 to 1 basis on the New York Stock Exchange, where volume came to 397.9 million shares.
Overseas, Japan's Nikkei stock average rose 1.20%. Britain's FTSE 100 rose 1.31%, Germany's DAX index was up 1.05%, and France's CAC-40 added 1.40%.