Stocks Rebound Mirrors Markets After Madrid, London Bombings
NEW YORK (TheStreet) -- U.S. stocks rebounded Tuesday as Coca-Cola (KO) and Johnson & Johnson (JNJ) reported earnings that beat forecasts, helping calm investors in the wake of the Boston bomb attacks that left scores maimed and according to the Associated Press, at least three people dead.
The S&P 500 rose 1.4% to 1,574.57, and gold recovered from its steepest decline in three decades.
Market reaction to the Boston attacks may end up mirroring investor sentiment following the Madrid commuter train bombings on March 11, 2004.
On the day of the Madrid attacks that left 191 dead and scores maimed, the S&P 500 fell 1.5% to 1,106 yet three weeks later it had fully recovered, and advanced steadily through the fall reaching 1,213.55 by year's end. A year after the terrorist attacks at the city's Atocha train station, the S&P had gained 8.4%.Investors were similarly undeterred in the aftermath of the London subway bombing on July 7, 2005. On that day, the S&P added 0.2% to 1,197.87, and then went on a six-day winning streak. By year's end, the index was trading over 1,260. A year later, the S&P had added 5.6%. The market's reaction to the events of Sept. 11, 2011 was far different. At that time, the economy was already on weak legs. The U.S. economy had fallen into recession in March 2001, and although it bounced back in the second quarter, the attacks dragged growth down by 1.1% in the third quarter. When the New York Stock Exchange reopened on Sept. 17, the Dow Jones Industrial Average tumbled 716.78 points, a 7.1% drop that was the Dow's worst day ever. A year after 9/11, the S&P had lost 17%. "Today seems to be somewhat of a reflexive bounce back after a pretty dark day yesterday," Lawrence Creatura, portfolio manager at Federated Investors in New York said in a phone interview. "We did have some somewhat positive data from the housing industry, but that doesn't justify the entire move we've seen today." The Dow Jones Industrial Average advanced 1.1% to 14,756.78 while the Nasdaq gained 1.5% to 3,264.63. Coca-Cola jumped 5.7% to $42.37 after the world's biggest beverage company beat first-quarter profit expectations by a penny and posted better-than-expected revenue as global sales volumes increased. Johnson & Johnson rose 2.1% to $83.42 after the world's biggest maker of health care products booked first-quarter earnings that exceeded estimates by four cents and revenue that also topped estimates as sales strengthened in both the U.S. and overseas, though international sales grew at a slower clip than domestic sales. W.W. Grainger (GWW) surged 7.2% to $241.88 after the distributor of maintenance and repair supplies raised the lower end of its 2013 sales growth forecast to 5% and the lower end of its earnings estimate to $11.30 a share. Intel (INTC), whose processors are inside about 80% of the world's PCs, added 2.6% to $21.93 ahead its first-quarter earnings announcement after the closing bell. The company is forecast by Wall Street to report quarterly profit of 41 cents a share on revenue of $12.59 billion. In the first quarter of 2012, Intel earned 53 cents a share on sales of $12.9 billion. U.S. Bancorp (USB) lost 1.8% to $32.72 after reporting an expected decline in mortgage banking revenue, which was offset by lower credit costs and lower mortgage-related expenses. Gold for June delivery at the COMEX division of the CME jumped $26.30 to settle at $1,387.40 an ounce a day after falling 9.3%, its largest one-day decline in 30 years. WTI crude oil for May delivery rose one cent to $88.72 a barrel on the New York Mercantile Exchange after plunging as much as $2.65 to $86.06 in earlier trading. The Consumer Price Index, the U.S. government inflation indicator, fell 0.2% in March after having increased 0.7% in February, The Bureau of Labor Statistics reported this morning. The CPI numbers were within the Fed's comfort zone for inflation. Economists were expecting inflation to be unchanged in March. Written by Andrea Tse and Joseph Deaux in New York >To contact the writer of this article, click here: Andrea Tse.
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