Stocks rise sharply on earnings news
Confident investors, buoyed by positive earnings reports from the financial sector and bullish corporate outlooks for 2005, returned to the market Tuesday after weeks of uncertainty, pushing stocks sharply higher.
With hundreds of companies reporting earnings this week and next, investors were cheered by results from Bank of America Corp., Wells Fargo & Co. and others, even as earnings from Dow component 3M Co. disappointed Wall Street.
This week’s earnings reports will give Wall Street a much clearer picture of the economy, analysts said, and could draw even more investors back into the market if earnings reports and forecasts for the year ahead remain strong.
“I think there’s a bias toward optimism on the part of investors, but mostly it’s just wait and see,” said Hugh Johnson, chief investment officer at First Albany Corp. “We’ve had good earnings, but it’s only this week that we’ll be getting into the real heart of earnings season.”
The Dow Jones industrial average rose 70.79, or 0.67 percent, to 10,628.79.
Broader stock indicators moved substantially higher. The Standard & Poor’s 500 index was up 11.46, or 0.97 percent, at 1,195.98, and the Nasdaq composite index gained 18.13, or 0.87 percent, to 2,106.04.
It was the first time in 2005 that the Dow, S&P and Nasdaq enjoyed back-to-back gains, having risen in Friday’s session. The markets were closed Monday for Martin Luther King Jr. Day.
A dip in crude futures also helped the buying after the major indexes start the session lower. Oil prices topped $49 per barrel in early trading, but slumped considerably by midday and fell below $48 by the afternoon. A barrel of light crude settled at $48.38, unchanged from the previous session, on the New York Mercantile Exchange.
“I think you saw a handful of investors deciding that the S&P, in particular, had gone down far enough and decided to place some big bets, and that started us off toward positive territory,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “And that move, with earnings going well and oil prices falling, kind of cascaded to the point we’re at now.”
Advancing issues outnumbered decliners by nearly 9 to 4 on the New York Stock Exchange, where preliminary consolidated volume came to 2.03 billion shares, compared with 1.66 billion on Friday.
The Russell 2000 index of smaller companies was up 7.39, or 1.2 percent, at 624.87.
Overseas, Japan’s Nikkei stock average fell 0.56 percent. In Europe, Britain’s FTSE 100 closed down 0.47 percent, France’s CAC-40 slid 0.17 percent for the session, and Germany’s DAX index rose 0.12 percent.