Wall Street books impressive gains
US stocks jumped yesterday with the S&P 500 racking up its three best days since March, sparked by results from bellwether Intel that lifted hopes for a rebound in technology spending and improved corporate profitability.
The broad S&P 500 has gained 6.1 per cent so far this week as companies, including Intel and Goldman Sachs, posted much better-than-expected results. It is the biggest three-day gain since the three major US stock indexes began a rebound from 12-year lows in early March.
The current earnings season is key as investors look for evidence to support optimism for an economic recovery.
In a sign that consumers might be faring better than feared, US credit card companies said defaults and delinquencies were lower in June than expected.
American Express forecast better business in the second half of the year, pushing its stock up 11.3 per cent to $27.22.
Optimism was further reinforced by manufacturing data that suggested the recession is abating, as well as minutes from the Federal Reserve’s most recent policy-setting meeting that showed officials judged that the US economy’s contraction was slowing.
But Intel set the tone with earnings that handily beat forecasts on better-than-expected consumer demand for personal computers. It also gave a strong outlook and shares of the world’s largest chip maker shot up 7.3 per cent to $18.05.
“Intel is the guts of the whole technology industry, so when they’re talking about consumers getting more active on the PC front, that augurs well for a lot of different things,” said David Katz, chief investment officer at Matrix Asset Advisors in New York.
The Dow Jones industrial average rose 256.72 points, or 3.07 per cent, to 8,616.21. The Standard & Poor’s 500 index gained 26.84 points, or 2.96 per cent, to 932.68, its best gain in nearly two months and putting it solidly back into the black for the year.
Along with tech shares, the financial sector led the way higher with the S&P financial index climbing 4.1 per cent. JP Morgan, which releases quarterly results today, gained 4.5 per cent to $36.26.