Wall Street is lifted by robust Citigroup earnings
US stocks advanced yesterday as stronger-than-expected profit from Citigroup helped financial shares shake off worries that the foreclosure mess could threaten the stability of the housing market.
Apple, which hit an all-time high during the regular session, disappointed investors after reporting gross margins and iPad shipments. Its shares skidded five per cent in after-hours trading while stock index futures fell, suggesting a weak market opening this morning.
Shares in IBM also fell after the closing bell, losing 3.5 per cent to $137.84.
The stock had reached a 52-week high during the regular session. International Business Machines Corp reported a higher-than-expected profit and raised its outlook for the full year, but the shares fell on sluggish sales of technology services.
“Both stocks have kind of gone parabolic into the earnings,” said Nick Kalivas, an analyst at MF Global in Chicago. “My fear is we’re going to get a buy the rumor, sell the fact trade.”
In regular trading, Citigroup gained 5.6 per cent to $4.17 after it reported its third consecutive quarterly profit.
Last week JPMorgan Chase and Co’s profits beat estimates. The KBW Bank index rose three per cent, recovering some of the losses banks had in the last few days.
The Dow Jones industrial average rose 80.91 points, or 0.73 percent, at 11,143.69.
The Standard & Poor’s 500 Index gained 8.52 points, or 0.72 per cent, at 1,184.71. The Nasdaq Composite Index added 11.89 points, or 0.48 per cent, at 2,480.66.
Citigroup said it is looking at the home loans it bundled into bonds and sold to investors. So far, it has not found any problems.
The largest US bank, Bank of America, reports earnings this morning. Bank of America’s shares rose three per cent to $12.40.
Before the close yesterday, around 10 per cent of S&P 500 companies had reported earnings, with 84 per cent of those beating expectations, according to data compiled by Thomson Reuters.