Financial bonanza hopes boost Dow
US stocks rose yesterday as investors bet on recently weakened technology and financial shares ahead of earnings from bellwethers Intel and JPMorgan Chase & Co, taking the Dow industrials to a fresh 15-month high.
A brokerage upgrade of drugmaker Merck & Co and an upbeat outlook from Kraft Foods gave an extra boost to the healthcare and consumer sectors.
After a rough start to the earnings season with Alcoa’s disappointing results, investors are looking for companies to meet or beat expectations to fuel a stocks rally that has lifted the S&P 500 almost 70 per cent from its March lows.
Chipmaker Intel is scheduled to post quarterly results today and bank JPMorgan tomorrow.
JPMorgan shares, up 1.8 per cent to $44.25, led gains in the KBW bank index, while chipmaker Advance Micro Devices jumped 5.8 per cent to $9.15 after falling nine of the last 11 sessions.
Intel shares rose 1.7 per cent to $20.96 and a semiconductor index gained 1.6 per cent.
“Heading into Intel and JPMorgan earnings, I think there was a sense things have sold off enough and buyers have felt more comfortable buying into semiconductors and financials,” said Michael James, senior trader at Wedbush Morgan in Los Angeles.
The Dow Jones industrial average gained 53.51 points, or 0.50 per cent, to 10,680.77. The Standard & Poor’s 500 Index added 9.46 points, or 0.83 percent, to 1,145.68. The Nasdaq Composite Index rose 25.59 points, or 1.12 per cent, to 2,307.90.
The Federal Reserve said in its periodic report, the Beige Book, that while economic activity was at a low level, “conditions have improved modestly further, and those improvements are broader geographically than in the last report”.
Wall Street, which had its worst session so far this year on Tuesday, fell at the open, weighed down by resource shares, but the Dow got its biggest boost from Merck shares, up 3.7 percent to $38.93 after Credit Suisse upgraded the stock.
Kraft raised its 2009 earnings outlook and rose for most of the trading day but finished down 0.2 per cent.