Stocks Rally After Latest Batch of Earnings

Stocks shot out of the gate Thursday after the latest batch of earnings gave investors some cause for optimism.

The Dow Jones Industrial Average was up more than 200 points, reclaiming the more than 100 points it lost in the prior session — and then some.

Yesterday's decline was largely attribute to comments by Fed Chairman Ben Bernanke that the economic outlook is "unusually uncertain."

Fed Chairman Bernanke was back on Capitol Hill Thursday, repeating Wednesday's Senate testimony for House members. Traditionally, the second day of his semi-annual testimony has little market impact compared with day one, though investors will be watching the Q&A session.

Earnings were all the rage this morning:

Economic bellwether UPS beat earnings expectations and raised its forecast.

And heavy-equipment maker Caterpillar delivered an equally upbeat report, topping expectations for both its earnings and forecast, citing continued strong salesin emerging markets. The company said its increase in sales from the first quarter to the second was the "most significant" in company history, adding that orders have now outpaced shipments.

AT&T also exceeded Wall Street's expectations, helped by strong iPhone sales, and said it sees strong 2010 earnings.

And 3M also powered higher with across-the-board sales gains.

Financial stocks got a boost after a slew of regional banks delivered solid results, including Fifth Third , which reported its first profit in two years, KeyCorp , which swung to a profit, PNC Financial , which saw its net income surge, and SunTrust , which reported a much smaller loss than expected.

A few disappointments: BB&T bank , widely considered to be one of the best survivors of the financial crisis, delivered decent net income but reported an increase in troubled loans, and Dow component Travelersfell far short of expectations. The insurance giant attributed its earnings miss to several severe wind and hail storms as well as flooding during the quarter that led to more claims. The company also trimmed the top of its full-year earnings forecast, citing the economy.

Microsoft and Amazon rose ahead of earnings from the tech giants, due out after the bell.

Existing-home sales gave the market a little extra boost: Sales fell 5.1 percentin June after a 2.2-percent drop in May but that was much less than the 8.1-percent decline expected. Home prices rose 1 percent from a year ago.

In the morning's other economic news, jobless claims climbed 37,000 last week, though continuing claims fell 223,000. And Leading indicators fell 0.2 percent last month, also less than expected, following a 0.4-percent increase in May.

Earlier, some encouraging economic news out of Europe helped get the market off to a positive start: Growth in the services and manufacturing sectors acceleratedin July, according to the latest purchasing-managers' index. And UK retail sales rose faster than expected in June, helped by early summer sales, good weather and a last-minute dash for electronics ahead of the World Cup.

Earnings releases after the bell Wednesday included better-than-expected numbers from Qualcomm, Netflix, and eBay, while Starbucks disappointed with its latest results.

In other news, the Senate passed the bill which restores unemployment benefits to millions of Americans. The House is expected to take it up this morning, where it is expected to pass, before it's sent off to President Obama to sign into law.

ExxonMobil and Chevron rose as the oil giants, along with a few other competitors, agreed to pool $1 billionfor a rapid-response joint venture that would be able to deploy equipment to a future oil spill within days and have it operational within weeks.

Ford gained more than 3 percent after the company yanked an asset-backed bond sale due to a wrinkle that came out of financial reform.

Americredit soared more than 20 percent after General Motors announced plans to buy the subprime lender.

Still to Come:
THURSDAY: Bernanke testimony, Day 2; House votes on jobless benefits; Fed's Dudley speaks; existing-home sales; leading indicators; earnings from Amazon, American Express, Microsoft and Capital One after the bell
FRIDAY: EU bank stress-test results; earnings from Ford, McDonald's and Verizon

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