Stocks rose higher Wednesday, buoyed by another drop in the price of oil and a better-than-expected earnings report from Cisco Systems (CSCO).
Major indexes recovered from losses Wednesday morning, when a $821 million loss for mortgage financier Freddie Mac (FRE) again raised worries about the financial sector.
On Wednesday, the Dow Jones industrial average was up 40.3 points, or 0.35%, to 11,656.07. The broader S&P 500 index gained 4.3 points, or 0.33%, to 1,289.18. The tech-heavy Nasdaq composite index rose 28.54 points, or 1.21%, to 2,378.37, helped by Cisco's results.
On the New York Stock Exchange, 17 stocks moved higher for every 14 that fell in price. On the Nasdaq, the ratio was 16 to 12 positive. Stocks continued their rally from Tuesday, when the Dow rose 331.62 points, or 2.94%, while the S&P 500 and the Nasdaq both rose more than 2.8%.
Oil prices on Wednesday continued to fall after the Energy Dept. reported crude oil inventories
increased by 1.7 million barrels in the week ended Aug. 1 from the previous week. On the NYMEX, crude oil for September delivery was off 59 cents at $118.58 per barrel. At one point, oil dipped to $117.11, which is a 20% drop from oil's all-time high of $147.27 on July 11.
At 296.9 million barrels, U.S. crude oil inventories are in the lower half of the average range for this time of year. Total motor gasoline inventories decreased by 4.4 million barrels to 209.2 million barrels and are in the middle of the average range.
Freddie Mac posted a loss of $1.63 per share, vs. earnings of 96 cents a year ago, as revenue fell 28%. The firm expects to reduce its dividend next quarter from 25 cents per share to 5 cents or less. Freddie's stock ended the day down 19.3%.
Cisco Systems (CSCO) reported earnings of 40 cents per share, beating Wall Street expectations by 1 cent. A year ago, Cisco earned 36 cents per share. Sales rose 10%. Cisco shares surged 5.65% on Wednesday.
Among other stocks in the news, Whole Foods Market (WFMI) suspended its dividend after posting a drop in earnings. The grocery chain saw earnings of 24 cents per share, down from 35 cents. Same-store sales rose 2.6% and total sales were 22% higher, but Whole Foods warned of lower profits for the rest of the year, and reduced the number of stores it expects to open.
Time Warner (TWX) posted earnings of 22 cents per share, vs. 25 cents a year ago, even as revenue rose 5.2%. The company plans to split its AOL unit into separate divisions for dial-up Internet and advertising.
Priceline.com (PCLN) reported earnings of $1.55 per share, vs. $1.11 a year ago, as revenue rose 45%. Gross travel bookings were up 71%.
Sprint Nextel (S) posted a loss of 12 cents per share, vs. earnings of 1 cent per share a year ago.
Nasdaq OMX Group (NDAQ) posted earnings of 48 cents per share, vs. 39 cents a year ago. Revenue rose 13%.
R.R. Donnelley & Sons Co. (RRD) reported earnings of 73 cents per share, vs. 67 cents a year ago. Revenue was up 4.6%.
Devon Energy (DVN) posted earnings of $2.88 per share, vs. $2 a year ago. Revenue rose 21%.
Major European indexes were higher Wednesday. In London, the FTSE 100 index rose 0.58% to 5,486.10. In Paris, the CAC 40 index added 1.41% to 4,448.33. Germany’s DAX index gained 0.65% to 6,561.39.
In Japan, the Nikkei 225 index gained 2.63% to 13,254.89. The Hong Kong stock market was closed.
Treasury prices fell Wednesday. The 2-year notes were off 02/32 to 100-11/32 for a yield of 2.59%; the ten-year Treasury dropped 08/32 to 98-20/32 for a yield of 4.052%; and the 30-year bond lost 26/32 to 95-02/32 for a yield of 4.689%.