United States stocks climbed on Tuesday in a broad rally, recovering from sharp declines set off by a bogus Associated Press Twitter post about explosions at the White House.
A false post by hackers about two explosions at the White House that supposedly injured President Obama provoked a steep drop in stocks, before they quickly recovered minutes later.
Thomson Reuters data showed the benchmark Standard Poor’s 500-stock index fell 14.6 points, or 0.93 percent, in the space of three minutes when the post hit the market. With the S.P. 500 valued at about $14.6 trillion at the time of the false Twitter post, the plunge briefly wiped out $136.5 billion of the index’s value.
“If that was true that had happened, that’s a justified sell-off, but because people suffer from information overload, people tend to overreact and don’t wait to substantiate things — that is the downside to a 24-7 news cycle,” said Jason Weisberg, managing director of Seaport Securities Corporation in New York.
“You want instantaneous pricing; you want all the advantages of the technology. Well then, you have to live by the negatives that the speed and expediency provide.”
The move was a reminder of the May 6, 2010, tumble in markets now known as the flash crash, when the Dow industrials dropped more than 600 points, eventually piling up a loss of about 1,000 points, in a few minutes before largely recovering.
Stocks had seen a solid advance before the tweet, lifted by a host of strong corporate earnings, including Travelers Companies, Netflix and Coach.
After the closing bell, Apple, maker of iPads and iPhones, climbed 4.9 percent to $425.95 after reporting second-quarter earnings and announcing plans to double the amount of capital it returns to shareholders.
The Dow Jones industrial average rose 152.29 points, or 1.05 percent, to close at 14,719.46. The Standard Poor’s 500-stock index gained 16.28 points, or 1.04 percent, to finish at 1,578.78. The Nasdaq composite index advanced 35.78 points, or 1.11 percent, to end at 3,269.33.
Netflix shares jumped 24.4 percent to $216.99 while Coach shot up 9.8 percent to $55.55. They were the S.P. 500’s two biggest percentage gainers.
Shares of the movie streaming service Netflix shot higher after it reported strong subscriber growth and earnings that beat expectations. Coach stock leapt after the company, which makes and sells upscale leather goods, reported higher-than-expected quarterly sales.
Travelers helped lift the Dow, up 2.1 percent at $86.35 after the insurer posted earnings that topped expectations and increased its dividend.
Earnings season has been largely positive, with more than 68.9 percent of S.P. 500 companies that have reported results so far beating expectations, according to Thomson Reuters data. Since 1994, 63 percent have surpassed estimates on average, while the beat rate is 67 percent for the last four quarters.
“We are encouraged to see the market focusing on fundamentals, because we had been in a period where the macro trade was pretty much driving things — whatever the global macro event was or political event was seemed to be affecting the movement of the markets for a period of time,” said Paul Mangus, head of equity research and strategy at Wells Fargo Private Bank in Charlotte, N.C.
The benchmark S.P. 500 index has risen 2.4 percent over the last three sessions.
Analysts see earnings growth of 2.3 percent this quarter, up from expectations of 1.5 percent at the start of the month.
Housing stocks ranked among the best performers, after Barclays raised its rating on the homebuilding sector to positive from neutral. The sector also got a lift from encouraging housing data, with new-home sales in the United States up 1.5 percent in March.
The PHLX housing sector index rose 3.8 percent, led by a 9.3 percent gain in Toll Brothers to $34.13.
Article source: http://www.nytimes.com/2013/04/24/business/daily-stock-market-activity.html?partner=rss&emc=rss