Dow soars by almost 100 points
A string of positive earnings reports renewed confidence in US stocks today and sent the major indexes sharply higher as investors shook off a steep loss posted by General Motors.
WhileGM’s troubles deepened after it announced a quarterly loss far beyond analysts’ expectations, wall Street investors were heartened by better news from fellow Dow industrials Caterpillar, AT&T and others.
That helped Wall Street overcome last week’s sharp drop, which was blamed on poor results from a number of major corporations.
Wall Street’s concerns about the state of the economy eased after the Commerce Department reported an all-time high in factory orders for big-ticket items. Durable goods orders rose 1.3% for December, better than the 1% forecast by economists.
“The durable goods numbers are telling us that businesses are spending money, and that the outlook for the economy is solid,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisers. “And after last week, the earnings numbers are encouraging. So we’re seeing a good bump today.”
The Dow rose 99.73, or 0.93%, to 10,809.47.
Broader stock indicators also made gains. The Standard & Poor’s 500 index added 9.15, or 0.72%, to 1,273.83, and the Nasdaq composite index gained 22.35, or 0.99%, to 2,283.00.
Bonds fell for a second session, with the yield on the 10-year Treasury note rising to 4.51% from 4.48% ON Wednesday. The dollar was mixed against other major currencies, while gold prices moved lower.
Crude oil futures rebounded after Opec ministers said no immediate production cuts were expected, though a cutback could occur down the road. A barrel of light crude settled at 66.26 dollars, up 41 cents, on the New York Mercantile Exchange.
Stocks moved up on higher volume, with investors regaining confidence and returning to the market after last Friday’s 213-point selloff. However, with the US economy projected to slow gradually through the rest of the year, some analysts remained concerned that the multi-year highs reached earlier this month could be the best the market can do this year.
“The market strength is good right now, but when I look ahead, I’m feeling rather torn right now,” said Ken Tower, chief market strategist for Schwab’s CyberTrader. “My forecast this year is for a bear market, but for now, I’m willing to give the bulls the benefit of the doubt.”
For now, the market remains intently focused on corporate earnings, but General Motors nonetheless was deemed an exceptional case, given the company’s financial struggles.
GM posted a quarterly loss of 2.09 per share – far worse than the 16-cents-per-share loss Wall Street had expected. Shares of GM, which lost 8.6 billion for all of 2005, slid 92 cents to 22.93.
Caterpillar, which gained 3.10 to 65.17, helped the market overcome GM’s news after the heavy equipment maker posted a 54% jump in fourth-quarter earnings. The company also raised its 2006 profit forecasts.
AT&T, formerly SBC Communications, saw strong growth in its wireless, broadband internet and business services divisions, beating Wall Street’s quarterly earnings expectations by 3 cents per share. AT&T climbed 30 cents to 25.51.
Telecom rival Verizon Communications added 30 cents to 31.68 after it said profits fell sharply in the fourth quarter, though a one-time gain a year ago skewed the comparison. The company met analysts’ profit forecasts.
Advancing issues outnumbered decliners by nearly 2 to 1 on the New York Stock Exchange, where volume totalled 2.07 billion shares, compared to 1.92 billion traded at the same point on Wednesday.
The Russell 2000 index of smaller companies rose 12.03, or 1.68%, to 728.48, a record high.
