Alcoa gives stocks a good start in US
US stocks rose yesterday as a surprising quarterly profit from Alcoa got third-quarter earnings off to a strong start.
Alcoa gained 1.1 per cent to $14.35 and rose as high as $15.10, a day after the Dow component posted its first profit after three consecutive quarterly losses, on cost savings and higher aluminum prices.
The S&P materials index gained 2 per cent.
The rally lost some of its steam in the afternoon as the latest US bond auction was poorly received after two previous successful debt sales, prompting some investors to trim holdings in US assets.
Adding to positive sentiment, US retailers posted generally strong same-store sales figures, while the Labor Department said the number of US workers filing new jobless claims slid to a nine-month low last week.
“You had more positive economic news, and Alcoa numbers were better than expected on both revenue and net income. So that lends credibility to the bulls’ thesis that the economy is gaining momentum,” said Jim Awad, managing director at Zephyr Management.
The Dow Jones industrial average rose 61.29 points, or 0.63 per cent, to end at 9,786.87. The Standard & Poor’s 500 Index gained 7.90 points, or 0.75 per cent, to 1,065.48. The Nasdaq Composite Index advanced 13.60 points, or 0.64 per cent, at 2,123.93.
Alcoa’s results — released after Wednesday’s closing bell — followed three days of gains for the S&P 500, mostly on optimism about third-quarter earnings. Investors have been eager to see what corporations have to show for the third quarter following much stronger-than-expected second-quarter earnings, which drove stocks higher in July and August.
The S&P 500 is now up 57.5 per cent from its 12-year closing low on 9 March.
US retailers posted their first monthly sales increase in more than a year, suggesting that recession-battered consumers might be regaining their ability, and desire, to spend again.
Store chains such as Macy’s rose 5.1 per cent to $19.53 and Abercrombie & Fitch gained 5.5 per cent.