Wall Street Rebounds

Stocks on Wall Street rose Tuesday, bouncing back after their worst decline since early November, following solid earnings from Coca-Cola and Johnson Johnson, and inflation data that reinforced expectations that the Federal Reserve would keep its stimulus in place.

The price of gold gained 2.2 percent after Monday’s 9 percent drop, its biggest daily fall in dollar terms. But even as gold buyers seized on the lower prices, investors in precious metals remained jittery about further declines.

In afternoon trading the Standard Poor’s 500-share index climbed 1.1 percent, and the Dow Jones industrial average gained 0.9 percent. The Nasdaq composite rose 1.2 percent.

Shares of Coca-Cola, up more than 5 percent and at their highest since 1998, and Johnson Johnson, at a new high, led the Dow industrials after reporting earnings that pleasantly surprised Wall Street.

Coca-Cola gained 5.3 percent after it posted slightly higher-than-expected profit and announced a deal to unload some distribution territory to five independent United States bottlers.

The stock of Johnson Johnson, a fellow Dow component, touched a record high of $83.50, up 2 percent, after the company reported better-than-expected first-quarter earnings.

International Paper and Vulcan Materials were among the top performers after bullish analyst notes.

Stocks on Monday posted their worst day since Nov. 7, as big declines in the price of gold, oil and other commodities fed a broad sell-off in equities. Stocks fell further after two fatal explosions near the finish of the Boston Marathon

Further supporting equities, data on Tuesday showed that the Consumer Price Index fell in March for the first time in four months, giving the Federal Reserve room to maintain its monetary stimulus to speed up economic growth.

“Dovish economic data is not good in the long run, but it is certainly supportive of more Fed action,” said Art Hogan, managing director at Lazard Capital Markets in New York.

He said earnings from safety plays like Coca-Cola and Johnson Johnson are going to determine if the market enters a correction phase that many are expecting — or if it finds more buyers looking for yield.

Other government data released on Tuesday showed industrial production grew 0.4 percent last month, topping expectations for a gain of 0.2 percent, while capacity utilization edged up to 78.5 percent in March from 78.3 percent in February.

Also, the Commerce Department reported an increase in the pace of home construction: housing starts rose 7 percent in March, reaching the seasonally adjusted annual rate of 1.04 million houses, exceeding the 1 million mark for the first time since June 2008.

BlackRock, the asset management firm, said revived interest in the stock market led to a 10 percent in profit in the first quarter. BlackRock shares rose 0.8 percent.

Goldman Sachs reported a stronger-than-expected rise in quarterly profit as it earned more from underwriting fees and its own investments, but shares fell 1.8 percent.

The retailer Target shed 0.6 percent after it warned first-quarter earnings would miss expectations after weaker-than-expected sales of seasonal and other items.

Intel and Yahoo are scheduled to post earnings after the close.

Article source: http://www.nytimes.com/2013/04/17/business/daily-stock-market-activity.html?partner=rss&emc=rss