May 24, 2024

Earnings Upswing Propels A Broad-Based Rally

Investors had been set up for a series of disappointments but got an unexpected lift from two bellwether companies — Intel and United Technologies — helping to spur a broad-based rally that put equities on the path for more gains in coming weeks.

“Until yesterday, earnings were lackluster, not too exciting, even disappointing,” said Nick Kalivas, senior equity index analyst at MF Global. He said the last round of reports “shifted the psychology quite significantly.”

Shares of Intel rose 7.8 percent to $21.41 while United Technology gained 4.3 percent to $85.90.

At the close, the Dow Jones industrial average had gained 186.79 points, or 1.52 percent, to 12,453.54. The Standard Poor’s 500-stock index rose 17.74 points, or 1.35 percent, to 1,330.36. The Nasdaq, driven by Intel, added 57.54 points, or 2.10 percent, to 2,802.51.

The Nasdaq posted its largest daily percentage gain since Octobe, while the Dow hit its highest close since early June 2008. The S. P. 500 had its best performance in a month.

European shares also closed sharply higher, with the FTSE 100 in London adding 2.1 percent and the DAX in Frankfurt gaining almost 3 percent.

For a second day, investors in the United States received some positive news about the housing market in the United States.

The National Association of Realtors said that the sale of existing homes in March rose 3.7 percent from February to an annual rate of 5.10 million units. Economists had expected a smaller increase to a five million unit pace.

But the median home price fell 5.9 percent in March from a year earlier to $159,600.

“The underlying trend for existing home sales is improving, but only at a gradual pace,” said Michael Gapen, an economist at Barclays Capital in New York. “Demand should gradually firm as labor market conditions continue to improve.”

On Tuesday, the Commerce Department said that home construction rose 7.2 percent in March from February to a seasonally adjusted 549,000 units a year. Building permits, an indicator of future construction, rose 11.2 percent after hitting a five-decade low in February.

The trend of positive earnings continued after the market’s close on Wednesday and could help spur another rally on Thursday, the last trading day before the Easter holiday. Apple rose 2.7 percent in after-hours trading after a blowout quarter that surged past expectations. Revenue for the technology giant rose 83 percent from the quarter a year ago.

F5 Networks, considered a momentum favorite for investors, climbed 7.3 percent to $99.74 after its second-quarter profit topped expectations and the company forecast third-quarter earnings largely above estimates.

American Express rose 0.8 percent to $47, recovering from earlier losses. While the company’s profit topped expectations, expenses at the credit card company rose.

I.B.M. slipped 0.4 percent to $164.75 after reporting a drop in signings of new business at its global services division during the first quarter. Its profit and revenue, however, came in above analysts’ projections, and it raised its full-year profit view.

In the bond market, Treasury prices fell Wednesday as investors preferred riskier assets. The price of the 10-year Treasury note fell 12/32, while the yield rose to 3.41 percent from 3.36 percent late Tuesday.

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