Stocks finished with solid gains on Wednesday, enjoying a broad-based advance thanks to rebounds in tech stocks -- the tech-heavy Nasdaq paced the major indexes with a 1.7% gain --- and strength in cyclicals.
The Dow Jones industrial average added 115.63 points, or 1.12%, to finish at 10,300.30. The broader Standard & Poor's 500-stock index finished up 13.08 points, or 1.16%, to 1,123.78. The Nasdaq composite index gained 33.67 points, or 1.70%, to 1,976.76.
Semiconductor stocks were the biggest contributors to S&P 500 and Nasdaq gains. Those indexes were also aided by communication equipment stocks, and oil-related companies, which were benefitting from higher crude oil prices. Oil and gas equipment stocks, steel and hotels were among the largest percentage gaining groups in the S&P 500.
While some good earnings news and outlooks help, A.C. Moore, chief investment strategist at Dunvegan Associates in Santa Barbara, Calif., says that underlying technical conditions are playing a role, too. "Stocks got oversold, and we're seeing a bounce from that oversold position."
Investors continue to keep an eye on geopolitical concerns. A car bomb targeting a Baghdad hotel killed more than 20 people in Iraq Wednesday, according to reports.
In economic news Wednesday, the U.S. consumer price index rose 0.3%, as analysts had anticipated. The core CPI (excluding food and energy) rose 0.2% vs. January's 0.2% increase, a bit higher than expected.
"For those anticipating a pace of inflation somewhat further from zero, there is a bit of good news in the short-run trends visible in today's CPI data," says economic research firm Informa Global Markets. Headline CPI has risen at a 3.7% pace over the past three months, vs. just 1.7% over 12 months, while the core CPI is rising at a 1.7% pace over three months vs. 1.2% over 12 months. But not all prices are rising: clothing prices are falling at a 3% pace in the recent period, vs. 1.7% from a year ago, while personal computer prices are falling as well.
In company news, FedEx (FDX) posted third-quarter earnings of 71 cents per share (excluding items) vs. 49 cents, on a 9.2% revenue rise. The company sees fourth-quarter earnings as high as $1.25, and its fiscal 2004 earnings as high as $3.45 from continuing operations. The overnight carrier sees a $1.4 billion fiscal 2004 capital expenditure, $200 million below its previous forecast. S&P has reiterated its buy rating of the stock. FedEx gained 4.6%.
Bear Stearns (BSC) saw 14% higher net revenue in its first quarter, and reported quarterly earnings per diluted share of $2.57 -- ahead of analysts' expectations -- vs. $2.00 one year earlier. Net income rose 32% to $361.1 million. Shares of Bear Stearns finished higher.
Goodyear Tire & Rubber (GT) rose on news that the company won't file its 2003 10-K form on time because of an ongoing probe into its accounting practices in Europe.
Shares of global media giant Vivendi (V) rose 3.4% after the company posted a narrower loss in its fourth quarter, despite a 55% revenue drop. The company sees very strong growth in its 2004 adjusted net income, and its net debt below 5 billion euros. Vivendi says it's in a position to pay a dividend to shareholders in 2005.
Yahoo (YHOO) added 5.4% following two upgrades. First Albany upgraded the stock to buy from neutral, and Citigroup reportedly upgraded Yahoo to buy, and set a $60 price target.
Stanley Works (SWK) raised its first-quarter EPS to a range of 63 cents to 67 cents, from an upward range of 51 cents. The company says that if current sales trends continue, its actual results could potentially exceed its revised guidance. S&P upgraded its rating of the shares to accumulate from hold. The stock climbed 5.8%.
On the other hand, children's book publisher Scholastic (SCHL) reported a third-quarter loss of 15 cents, vs. a 1 cent loss, despite a 9% revenue rise. The company cites greater-than-anticipated challenges in its Direct-to-Home Continuity, and Trade businesses. Scholastic expects its fiscal 2004 EPS to fall below $1.95. Merrill Lynch has cut its estimates of Scholastic. Shares fell 7%.
On Thursday, traders will hear a first quarter earnings report from Morgan Stanley (MWD), and an update from Darden Restaurants (DRI).
Thursday's economic calendar delivers the delayed January producer price index, and initial jobless claims. Informa's number crunching shows the PPI coming in at 0.4%, with the core at 0.1%, vs. a six-month average of 0.3% and 0.1%. "Not all that spectacular," says Informa.
Treasuries recovered to finish mostly unchanged in price Wednesday. Bonds opened higher, dipped lower after the Bureau of Labor Statistics announced that it would announce January's overdue producer price index figures on Thursday morning, and then regained their footing.
In foreign exchange, the euro was at $1.221, Britain's pound sterling was at $1.815, and the U.S. dollar was at 108.16 yen.
European stock markets finished higher Wednesday.
London's Financial Times-Stock Exchange 100 index finished up 27.9 points, or 0.63%, at 4,456.80. The Labour government has wrapped up the presentation of its budget and tax plans for the coming year. The U.K. February unemployment fell by 6,600 to 885,200, while the jobless rate stood at 2.9%. Meanwhile, wage growth was strong, with average earnings up -- the highest since September, 2001, but the rise was largely due to bonuses, reports Informa.
Separately, the Bank of England's Monetary Policy Committee minutes showed a 9-0 vote for steady interest rate policy in March, "but indicated they looking to tighten credit in near future," reports Standard & Poor's MarketScope. Retailer Kingfisher was lower as UBS cut its rating on the stock to neutral from buy. Reuters was also higher.
Germany's DAX index rose 74.42 points, or 1.95%, to finish at 3,896.79, as BASF stock gained after the company, which had a quarterly loss, forecast moderate growth for the year. BMW was also higher, saying it expects strong earnings this year.
In Paris, the CAC 40 index rose 68 points, or 1.9%, to 3,656.04. There was little reaction to a report showing that France had a current account deficit in January. Shares of Areva, Casino, and Jet Multimedia were higher.
Asian markets finished higher on Wednesday. In Japan, the Nikkei 225 index added 194.57 points, or 1.73%, to 11,436.86, as the central bank said faster-than-expected consumer spending is helping the Japanese economy, reports Standard & Poor's MarketScope.
In Hong Kong, the Hang Seng index gained 43.1 points, or 0.33%, to 12,975.72. Stocks regained some strength on Wednesday on bargain hunting, but investment appetite was still suppressed by growing concerns of global terrorist threats.