Stocks rose on Wednesday, erasing early losses, as oil prices fell and some companies reported strong earnings. Meanwhile, the Federal Reserve indicated in a report that economic activity continued to expand in September and early October, but at a "moderate or gradual" pace.
The Dow Jones industrial average climbed 128.87 points, or 1.25%, to 10,414.13. The broader Standard & Poor's 500 index gained 17.62 points, or 1.5%, to 1,195.76. The tech-heavy Nasdaq composite index jumped 35.24 points, or 1.71%, to 2,091.24.
In the energy markets, November West Texas Intermediate crude oil settled down 79 cents at $62.41 a barrel. Very bearish EIA inventory data led prices lower, says Action Economics. Meanwhile, Hurricane Wilma was upgraded to a Category 5 storm with 175 mph winds, and was expected to sideswipe Central America and Mexico and could strike Florida by the weekend, according to news reports.
Thursday's economic reports include weekly jobless claims, Philadelphia Fed survey, and leading indicators index.
On Wednesday, the Fed's Beige Book said economic activity continued to expand in September and early October, but most districts said the pace was "moderate or gradual," reports Action Economics. A number of banks said retail sales were either "below plan or weak." There was some firming in labor market conditions, however. Consumer confidence was seen ebbing as gas prices rose, while some easing in home demand was noted as more common. All Districts noted increased cost pressures from higher energy prices, and said there were "widespread" increases in prices for building materials, largely in the wake of the hurricanes, reports Action Economics.
In other economic news, September housing starts rose 3.4% to 2.108 million units, beating an expected 1.7% fall.
The earnings calendar was heavy. A few companies, such as Yahoo (YHOO), Motorola (MOT), and J.P. Morgan Chase (JPM), reported strong results.
After the market close Tuesday, Intel (INTC) reported third-quarter earnings per share of 32 cents (includes a legal settlement charge and tax item), vs. 30 cents a year ago, on an 18% revenue rise. The chip giant predicted lower growth that Wall Street expected in the current quarter -- it sees fourth-quarter revenue of $10.2-$10.8 billion and gross margin percentage of about 63%. S&P upgraded the stock to buy from hold on valuation.
Yahoo (YHOO) posted better-than-expected third-quarter earnings per share of 17 cents, the same as a year earlier, as items in both quarters offset a 47% revenue rise.
Motorola (MOT) posted third-quarter EPS from continuing operations of 69 cents (includes 39 cents in gains), vs. 19 cents a year earlier, on 26% sales rise. The cell phone maker sees 32-34 cents fourth-quarter EPS from continuing operations on sales of $10.3-$10.5 billion.
J.P. Morgan Chase (JPM) posted quarterly earnings of 71 cents, vs. 39 cents, on a 15% revenue rise. The company says President Jamie Dimon will take over as CEO six months earlier than expected.
Altria Group (MO) posted third-quarter EPS of $1.38, vs. $1.29, on 10% revenue rise. The food and tobacco companyy narrowed its 2005 continuing operations EPS forecast to $5.05-$5.10.
Long-dated Treasuries finished slightly higher as the market digested Fedspeak from four regional presidents, an unexpected 3.4% rise in September housing starts, and the Fed's Beige Book showing moderate to gradual economic growth in September and early October, reports Standard & Poor's MarketScope. The 10-year note rose 03/32 to 98-11/32 for a yield of 4.46%.
European stock markets finished lower on Wednesday. London's Financial Times-Stock Exchange 100 index was down 96.1 points, or 1.83%, at 5,167.8 on worries about global inflation and a weakening British economy.
Germany's DAX index plunged 101.2 points, or 2.05%, to 4,845.98, even though eurozone industrial production rose more than expected, by 0.8% in August.
In Paris, the CAC 40 index lost 86.5 points, or 1.93%, to 4,375.09.
The steep decline on Wall Street yesterday raised concerns that a potentially faltering U.S. economy could have a global impact, sending Asian markets sharply lower. Higher-than-expected U.S. September PPI reignited concerns about inflation and its impact on consumer spending, says Standard & Poor's MarketScope. A negative reaction in after-hours trading to quarterly earnings from Intel also contributed to bearish sentiment in Asia, says Standard & Poor's MarketScope.
In Japan, the Nikkei 225 index tumbled 222.75 points, or 1.67%, to 13,129.49.
In Hong Kong, the Hang Seng index sank 224.64 points, or 1.54%, to 14,372.76. HSBC Holdings, China Mobile, and Hutchison Whampoa, which together account for over half of the market capitalization on the Hang Seng, led the market lower by index points, says Standard & Poor's MarketScope.