Stocks Gain 2% as Tech, Economy Lead Way
Technology stocks rose more than 2 percent Wednesday following encouraging earnings, while a slew of economic reports fueled the notion the economy was showing stronger signs of a turnaround and boosted the broader market.
The major indexes gained 1.5 percent following the market's biggest two-day gain since the beginning of June. The tech-laden Nasdaq led the charge, powered higher by some of its biggest names.
Readings on consumer prices, New York manufacturing, industrial production and mortgage applications each provided hope for the economy. While none was particularly buoyant, each beat analyst expectations.
Coupled with a fairly strong start to earnings season, investors continued a rally that began Monday, focusing Wednesday on technology leaders. Bank stocks led Monday's rally, while housing and commodities brought a modest gain to the markets on Tuesday.
Intel beat expectations with its after-the-bell earnings report late Tuesday, and issued guidance that was well above consensus as well. Intel's main rival, Advance Micro Devices , also surged.
On the down side of earnings Yum Brands, the parent of KFC, Taco Bell, and Pizza Hut, also reported better-than-expected quarterly earnings reports but shares fell when the company lowered its outlook.
The biggest event of the day may well be the minutes of the most recent FOMC meeting, which will be out at 2 pm New York time. Once again, investors will be looking not only for positive comments about an economic recovery, but also further insight into any possible exit strategies from the Fed's expanded balance sheet, zero interest rates, and other extraordinary measures designed to deal with the economic crisis.
At the same time, the New York Federal Reserve Bank issues its Empire State Manufacturing Index, a measure of New York state manufacturing activity.
CIT Group will garner more investor attention, with the Wall Street Journal reporting regulators are negotiating a detailed aid plan for the troubled commercial lender.
Bank stocks, though, were mostly higher, led by UBS and Citigroup . The SPDR Financial ETF , which tracks the industry's biggest names, reflected the group's gains.
Credit card leader Capital One Financial saw its shares surge after it said defaults rose in June but less than expected.
All but one of the Dow industrial components opened in positive territory, with McDonald's being the only negative performer, though a few others were teetering on the brink. Intel, Cisco and American Express were among the top gainers.
Elsewhere in earnings, media conglomerate Gannett saw its shares surge after the company beat expectations with profit of 46 cents per share.
And Abbott Labs saw its shares fall after the company met analyst estimates but lowered its forecast.
Energy prices rose following the Energy Information Administration's key petroleum status report that showed a larger than expected drawdown in supplies. US light, sweet crude rose more than $1 a barrel.
Boeing shares rose after the company reported that it will be cutting 1,000 jobs in its defense division because of Pentagon budget cuts. Also in airlines, American parent AMR posted a $390 million loss that was less than estimates, sending shares higher.
In other corporate news, Janus Capital shares slid a day after the mutual fund company abruptly replaced CEO Gary Black after profit dropped 76 percent.
Market breadth was strongly positive early on, with gainers beating losers 8 to 1 as nearly 400 million shares changed hands after the first two hours of trading on the New York Stock Exchange.