Stocks rallied Wednesday, boosted by upbeat quarterly results and potential M&A action. Near-term oversold conditions helped bring about a technically driven rebound after recent losses, says Standard & Poor's MarketScope.
The Dow Jones industrial average rose 108.86 points, or 1.01%, to 10,858.62. The broader S&P 500 index gained 10.87 points, or 0.87%, to 1,265.65. The tech-heavy Nasdaq composite index snapped a four-day losing streak, climbing 22.02 points, or 0.98%, to 2,266.98.
Earnings returned to the spotlight Wednesday. After Tuesday's close, Cisco Systems (CSCO) posted better-than-expected second-quarter profits. Baird upgraded the network equipment maker from neutral to outperform. The stock jumped 7%.
M&A activity was another focus. Pharmaceutical company Pfizer (PFE) said it will consider spinning off or selling its consumer products unit, which includes the Listerine and Dramamine brands. The unit reportedly could sell for up to $11 billion.
Also in deal news, billionaire investor Carl Icahn called for media conglomerate Time Warner (TWX) to split into four separate companies. He cited a report he commissioned that accused Time Warner of mismanaging for the short term.
Spanish-language TV network Univision (UVN) soared 10% on reports of a possible sale. Potential suitors were likely to include News Corp. (NWS), CBS (CBS) and Disney (DIS), according to the reports.
Outside of M&A action, General Motors (GM) was downgraded by Deutsche Bank from hold to sell. The automaker announced a restructuring plan Tuesday that would include trimming its dividend by half.
In earnings Wednesday, pharmaceutical company GlaxoSmithKline (GSK) posted 44% higher fourth-quarter profits on a 13% revenue rise. Soft drink and snack food giant PepsiCo (PEP reported fourth-quarter profits of 65 cents a share, up from 58 cents, on a 14% sales rise. Both stocks were up slightly.
More quarterly results are on tap Thursday. Companies reporting earnings include Aetna (AET), Marriott International (MAR) and MetLife (MET).
Also in the news, McDonald's (MCD) was trading modestly higher after posting a 5.7 uptick in January global same-store sales. IBM (IBM) introduced a new high-performance chip, called the Cell. The computer manufacturer said it would use the chip in servers for defense, medical imagery and entertainment.
Telecom-equipment maker Nortel Networks (NT) said it was close to a $2.47 billion settlement of shareholder lawsuits over the company's accounting scandal.
In economic news, the Federal Open Market Committee said it will hold a two-day meeting beginning March 27 instead of a previously scheduled one-day meeting March 28. The Mortgage Bankers Association's weekly mortgage market index fell 1.2% in a light day for economic data.
On the economic front Thursday, initial jobless claims are expected to rise 12,000 to 285,000 for the week ended Feb. 4, says Action Economics. December wholesale sales are seen rising 0.5%, while inventories are forecast to jump 0.7%.
In the energy markets Wednesday, March West Texas Intermediate crude oil futures settled down 54 cents at $62.55, despite a weekly report that showed supply declining 300,000 barrels. Traders had been expecting a 300,000 barrel increase, says Action Economics.
European markets finished lower. In London, the Financial Times-Stock Exchange 100 index dipped 21.7 points, or 0.38%, to 5,725.1. Germany's DAX index slipped 6.51 points, or 0.11%, to 5,666.41. In Paris, the CAC 40 index dropped 40.32 points, or 0.82%, to 4,895.08.
Asian markets ended sharply lower, reportedly on profit-taking. Japan's Nikkei 225 index tumbled 448.31 points, or 2.68%, to 16,272.68. In Hong Kong, the Hang Seng index slid 143.57 points, or 0.93%, to 15,373.44. Korea's Kospi index skidded 21.29 points, or 1.6%, to 1,310.99.
Prices for 10-year Treasury notes slipped to 99-08/32 with a yield of 4.59%, while 30-year bonds fell to 110-07/32 for a yield of 4.68%. The yield curve for two-year and 10-year notes remained inverted. Former Fed Chairman Alan Greenspan reportedly made bullish comments about bonds to Lehman Brothers Tuesday night.