Intel's Earnings Leave Wall Street Beaming
Updated from 4:16 p.m. EDT
Stocks in New York rallied Wednesday as solid earnings from microprocessor maker
Intel
(INTC) - Get Report
led the technology sector and the broad market higher.
The
Dow Jones Industrial Average
soared 256.8 points, or 2.08%, to 12,619.27, and the
S&P 500
jumped 30.28 points, or 2.27%, to 1364.71. The
Nasdaq Composite
rocketed 64.07 points, or 2.8%, to 2350.11.
Kim Caughey, senior investment analyst with Fort Pitt Capital Group, said that investors are finding relief in the positive numbers as earnings season picks up the pace. "The end of the world hasn't happened," she said. "It's going to be a seasonally soft next couple of quarters, but it looks like we'll do okay."
Breadth was positive. Around 2.10 billion shares changed hands on the
New York Stock Exchange
, with advancers outrunning decliners by a 4-to-1 margin. Volume on the Nasdaq reached roughly 2.11 billion shares, as winners topped losers 7 to 3.
Tech shares got a special boost after chipmaking giant Intel
exceeded analysts' estimates
in the first quarter, even as earnings came in lower than last year. Current-quarter sales guidance leaned to the higher end of consensus. Shares of the Dow component jumped 5.8%. The Philadelphia Semiconductor Sector Index sprang higher by 5.5%.
Fellow industrial
Coca-Cola
(KO) - Get Report
said first-quarter earnings climbed 19% to a better-than-expected $1.5 billion, or 64 cents a share, on sales that swelled 21% from a year earlier. Shares ended up 21 cents at $61.15.
Caughey commented that the report was encouraging, since many investors had been worried that Coke wouldn't be able to pass on heightened inflationary pressures to the consumer. But, she said, that doesn't appear to have been an issue.
In the financial sector,
JPMorgan Chase
(JPM) - Get Report
said its quarterly earnings dropped roughly by half to $2.37 billion, or 68 cents a share, but that
. The investment bank blamed its dwindling bottom line on a bigger loan-loss reserve and writedowns related to leveraged lending. Shares added 6.7%.
Similarly,
Wells Fargo's
(WFC) - Get Report
profit was squeezed as the bank set aside more money to cover soured loans, but the decline was a relatively tame one -- 11% to $2 billion -- and that was good enough to handily
. Shares were ahead by 4.3%.
Following the prior close
Washington Mutual
(WM) - Get Report
said it swung to a steeper-than-expected loss of $1.14 billion, or $1.40 a share -- as it first predicted a week ago -- in large part due to a soaring loan-loss provision.
Further, the bank's finance committee chair, Mary Pugh,
under investor pressure at the company's annual meeting. WaMu also announced that it closed last week's
. The stock finished up 2.3%.
After the closing bell, Dow member
IBM
(IBM) - Get Report
said continuing-operations earnings vaulted 25.7% to $2.32 billion, or $1.65 a share,
trouncing analyst estimates
. The stock, which ran up 2.8% in heavy volume during the regular session, was adding another 3.3% to $124.46 in late trading.
But
eBay
(EBAY) - Get Report
saw mixed after-hours action after user growth came in
weaker than expected
, even though earnings and revenue were both above par, rising more than 20% apiece from last year. Shares of the auction Web site operator were recently up 0.7% at $32.22 after the close.
On the data side, the
Federal Reserve
issued a downbeat but hardly surprising beige book, saying that nine of its 12 districts have suffered weakening economic conditions since the last report in March amid softening consumer spending and a worsening labor market. The remaining three districts -- Boston, Cleveland, and Richmond -- described general economic activity as "mixed or steady."
As for the housing sector, residential real estate and construction were "generally anemic" and commercial growth was slowing. Factory numbers were widely mixed among the districts, and commodities prices were rising across the board, which partially contributed to a mostly robust agricultural sector. The report also said tourism from foreign visitors was particularly strong, presumably due to the weakening dollar.
Elsewhere on the economic docket, Labor Department's March consumer price index matched projections with a 0.3% increase in the core rate, which excludes food and energy, was also in line with estimates, climbing 0.2%. The year-over-year changes similarly yielded no surprises.
Brian Bethune, chief financial economist with Global Insight, sees the report as a positive. He believes that because prices fell in such key products as apparel, passenger cars and consumer electronics -- and because the biggest upward drivers were energy-related -- the economy's troubles lie in energy rather than broad-based inflation.
"There's no evidence of generalized inflationary movements here," he said. "People unfortunately are confusing what is a serious problem in the energy sector, in terms of demand-and-supply balance, with inflation. They're missing the point."
Indeed, crude oil hit another new high for the second day straight -- $115.07 a barrel -- after the Energy Information Administration said crude stockpiles sank by 2.3 million barrels last week.
Bethune also noted that those ill effects are spilling into food thanks to ramped-up corn production for the ethanol industry, which has led to ballooning prices in corn and other grains. He added that, since it's not in the Fed's mandate to deal with that energy problem, and since Congress has done "too little" in the way of encouraging adoption of energy-efficient technologies, these energy-rooted troubles seem far from over.
Crude finished up $1.14 at $114.93, and gold futures jumped $16.30 to settle at $948.30 an ounce. The dollar earlier dropped to a record low against the euro, at $1.5977, and settled only somewhat higher than that. The greenback did, however, firm a bit against the yen. The dollar index, which measures the greenback against a basket of currencies, was off 0.8%.
Regardless, Treasury prices lost ground as investors swung their money into equities. The 10-year note slipped 18/32 in price to yield 3.67%, and the 30-year bond slid 21/32 in price, yielding 4.48%.
Separately, the Commerce Department said housing starts and building permits for last month were both weaker than expected, but Caughey finds the development heartening. "We have a lot of supply to work off, and something has to give," she said, "so it's good to know that more supply isn't going in."
Also, the Fed said industrial production climbed 0.3% in March, a bit better than the negative 0.1% consensus and up from a revised 0.7% downtick in February. Capacity utilization registered at 80.3%, flat with the prior month's revised number and a hair lower than consensus.
Back in earnings,
Seagate
(STX) - Get Report
, a disk-drive maker, said first-quarter earnings jumped 62% and
edged out analyst targets
, though the company guided under the consensus for the second quarter. Shares lost 5.5%.
Railroad company
CSX
(CSX) - Get Report
rose 3.7% after topping expectations and issuing bullish full-year guidance. The company said it was helped by the red-hot commodities market, among other things.
Markets abroad were mostly rising. The Hang Seng Index in Hong Kong lost 0.1% overnight, but Tokyo's Nikkei 225 added 1.2%. As for European bourses, the FTSE 100 in London surged 2.4% as Germany's Xetra Dax leapt 1.8%. The Paris Cac climbed 1.6%.