Stocks Stage Impressive Rally
Stocks Stage Impressive Rally
Stocks trucked higher on Wednesday as investors elected to focus on some good news for a change, including some rosy profit updates from retailers and a report that businesses beefed up their inventories in July.
Investor confidence was boosted after CEOs from hundreds of companies signed off on their company books on Wednesday, which the Securities and Exchange Commission had set as a deadline for sworn statements from corporate chieftains. But a few companies warned they would have to restate their results, sending stocks of those companies lower.
The biggest rally in about two weeks came a day after a big sell-off following the Federal Reserve's failure to reassure jittery investors by leaving interest rates unchanged and warning that the central bank is growing concerned about the potential for weakness in the economy.
The Dow Jones industrial average streaked 260.92 points higher, or 3.08%, to 8,743.31. The broader Standard & Poor's 500-stock index jumped 35.41 points, or 4%, to 919.62. And the tech-heavy Nasdaq composite surged 65.01 points, or 5.12%, to 1,334.29.
Investors on Thursday will turn their attention to more earnings reports. Among the companies expected to release results are integrated circuit maker Analog Devices (ADI ), PC maker Dell (DELL ) and retailers GAP (GPS ), Target (TGT ) and Kohl's (KSS ).
There are a few minor economic data reports out on Thursday. A report on U.S. capacity utilization is expected to show a slight decrease to 76.0% in July from 76.1% in the previous period. August's Philadelphia Fed Index, a gauge of regional manufacturing activity in the Northeast, is expected to increase to 9.0 from 6.6. Also on tap: initial jobless claims data for the week ended Aug. 10. The bigger news is Friday's release of the consumer price index for July.
In stocks news on Wednesday, Abercrombie & Fitch (ANF ) posted quarterly profits that exceeded expectations and furniture maker La-Z-Boy (LZB ) reporters higher quarterly earnings before a charge on better-than-expected sales.
Also providing a lift was No. 1 retailer Wal-Mart's (ANF ) announcement that it would join the list of companies expensing stock options and boost the size of its share buyback program to $5 billion.
The Nasdaq was lifted by data storage company Network Appliance (NTAP ), which reported a quarterly profit and forecast a minor revenue increase in the current quarter.
But Applied Materials (AMAT ) warned that orders could fall as much as 15% in the next quarter. Nevertheless, the semiconductor equipment maker posted expectation topping quarterly results.
In economic news, a report showed that U.S. business inventories rose 0.2% in June after an unrevised 0.2% gain in May. The data were in line with expectations, says Standard & Poor's economic research unit MMS, but they suggest stronger second quarter gross domestic product growth than previously thought.
Among the accounting do-overs announced Wednesday, natural-gas supplier Nicor (GAS ) said that it would restate its first-quarter 2002 financial results to reflect certain items that were originally reported in its second-quarter results.
Credit-card issuer Household International (HI ) said that as part of a review, it will restate certain prior-period earnings due to accounting treatment of its Mastercard/Visa co-branding relations and a credit card marketing pact with a third party.
And ad agency Interpublic Group (IPG ) said it will restate financial results dating back to 1997.
Meanwhile, airline stocks lost more altitude Wednesday. Beleaguered United Air Lines parent UAL (UAL ) slid 37% on the session. The group has been hard hit following Monday's announcement by US Airways (U ) that it was filing for Chapter 11 bankruptcy protection and Tuesday's disclosure by American Airlines, AMR's (AMR ) operating company, that it was laying off employees and shrinking its fleet. Aircraft manufacturers were also struggling.
Drugmaker Merck (MRK ) said it withdrew its application to market its painkiller Arcoxia in France and Germany "to allow for additional discussions."
Treasuries ended mostly lower in price on the comeback in equities. The yield on the 10-year note broke below 4.0% to 40-year lows, before snapping back higher to 4.09% by the close as stocks gained momentum.
European markets closed lower on the heels of Tuesday's late-day sell-off in the U.S. In London, the FTSE 100 index was down 100.60 points, or 2.36%, to 4,171.10 in reaction to the U.S. skid late yesterday on the Fed's lower economic growth concerns. Traders are temporarily ignoring a report that UK unemployment fell 3,100 in July to 3.1%, its lowest level in 27 years.
In France, the CAC 40 lost 149.42 points, or 4.41%, to 3,240.81 despite a report that French industrial production rose 0.2% in June.
And in Germany, the DAX Index gave up 93.29 points, or 2.53%, to 3,589.92 following a report that the German Consumer Price Index rose to 1.0% in July from 0.8% in June, which was the latest in a series of poor German economic reports.
Most other European markets were lower as well.
In Asia, the markets finished mixed. In Japan, the Nikkei dropped 50.20 points, or 0.52%, to close at 9,638.41, led by exporter shares on uncertainty over the US economy following the Fed's decision to leave rates unchanged.
In Hong Kong, the market gained 138.71 points, or 1.37%, to 9,961.35.