Wall Street Snaps Back on Strong Earnings
NEW YORK ~ Wall Street roared higher on Wednesday as strong earnings from IBM and others helped investors shake off banking sector woes that sparked a big selloff a day earlier.
The Dow Jones Industrial Average jumped 279.01 points (3.51 percent) to close at 8,228.10, recouping most of a punishing drop of more than four percent for blue chips on Tuesday.
The tech-heavy Nasdaq rose 66.21 points (4.60 percent) to 1,507.07 and the broad-market Standard & Poor’s 500 index rallied 35.02 points (4.35 percent) to 840.24.
The market regained some footing after a brutal selloff on Tuesday as fears of a further meltdown in the global banking sector overshadowed the optimism surrounding the inauguration of US President Barack Obama.
“The stock market fared much better on Barack Obama’s first full day as president,” said Al Goldman at Wachovia Securities.
“The major averages recovered much of yesterday’s big drop, led by financials and technology stocks. Banks rebounded on hopes that an Obama stimulus plan would stem foreclosures and deal with toxic assets on balance sheets.”
Fred Dickson at DA Davidson & Co. said the market had been “dramatically oversold” and was ready for a relief rally.
“The financial dark cloud has extended over the entire stock market, although it doesn’t appear as dark as it did last fall when the credit markets seized up” last year, Dickson said.
“While we don’t see a near-term solution to the huge problems facing the banking system, the flow of money into the economy through the credit markets should provide some stimulus to get the economy moving forward, albeit at a very slow pace.”
Among key stocks, IBM led the gainers, rising 11.5 percent to US$91.52 after it reported late on Tuesday a jump in quarterly profit of 12 percent to $4.4 billion for the past quarter, topping most forecasts.
Elsewhere in technology, Apple rose 3.15 percent to $80.66 and Microsoft added 2.44 percent to $18.93.
The banking sector also rebounded from a dismal session on Tuesday.
Citigroup surged 31 percent to $3.67 after a 20-percent slump on Tuesday. After the close the company named as chairman former Time Warner chief Richard Parsons.
Among other banking shares, Bank of America rallied 31 percent to $6.68, JPMorgan Chase climbed 25 percent to $22.63 and PNC vaulted 37 percent to $30.16.
Among other firms reporting earnings, Abbott Laboratories rose 6.3 percent to $52.32 after meeting forecasts and projecting gains in the coming months.
Bonds remained volatile, falling back as yields moved above historic lows. The yield on the 10-year US Treasury bond jumped to 2.526 percent from 2.345 percent Tuesday while that on the 30-year bond hiked to 3.138 percent from 2.947 percent. Bond yields and prices move in opposite directions.Filed under: Our World