Strong Earnings Push Wall Street Higher

Strong Earnings Push Wall Street Higher

By JACK HEALY
Published: October 14, 2009

For Wall Street, the news was sweet: a major bank turned a $3.6 billion profit, earnings were up at a major computer-chip maker, and retail sales held up better than expected.

And so investors around the world went shopping, lifting stock markets from London to New York to Mexico City. On Wall Street, shares touched their highest levels of the year, and the Dow flirted again with retaking 10,000.

Many investment experts dismiss the significance of such big, round benchmark numbers, and say that no sophisticated investors or hedge funds make investment decisions based on whether a stock index’s total value can be measured in four or five digits.

The Dow Jones industrial average, one of the most-watched measures of the financial markets, surged at the opening and was up 73 points, or 0.7 percent, at about 10:30 a.m. The broader Standard & Poor’s 500-stock index and the Nasdaq were about 0.9 percent higher.

The major stock indexes have rebounded by 50 percent or more in a scorching rally that began in early March and galloped higher through the summer and early autumn, as the economy stabilized and once-bleeding companies began to report better profits and rising revenue.

That optimism got louder on Wednesday.

Investors rushed to take positions on companies and commodities that could benefit from a broad upturn in corporate profits and the global economy. Crude oil prices hit their highest levels since last October, topping $75 a barrel. Safety bets like the dollar and government bonds got creamed.

Financial stocks surged after JPMorgan Chase announced a third-quarter profit that trounced expectations. JPMorgan was the first major financial company to announce earnings, and the sight of rising revenues and stabilizing losses at one of Wall Street’s most powerful banks lifted expectations that the financial sector was back on its feet, a year after its near-implosion.

Shares of JPMorgan climbed 3 percent in early trading, and its rising tide lifted shares of other banks like Goldman Sachs, Wells Fargo, Bank of America and Citigroup, which are all scheduled to report their own quarterly results in the days ahead.

Even regional banks shared in the hoopla, despite lingering problems with their mortgage portfolios and worries that the smaller banks are more exposed to losses in the commercial real estate market.

Investors swept up shares of computer companies, search engines and software makers after Intel reported profits that surpassed Wall Street’s expectations and foreshadowed a return to global growth. Shares of Intel, which reported a profit after markets closed on Tuesday, were up 3 percent.

Shares were also higher in Asia and Europe. The FTSE 100 in London rose 1.7 percent while the DAX in Frankfurt was 2 percent higher. The CAC-40 in Paris rose 1.7 percent.

In Asia, the Shanghai index rose 1.2 percent, while Hong Kong’s Hang Seng index increased 2 percent. Japan’s Nikkei index slipped 0.2 percent.

http://www.nytimes.com/2009/10/15/business/15markets.html?hpw