Updated from 2:34 p.m. EDT
Stocks on Wall Street were reaching for higher ground Wednesday as a reassuring earnings statement by
helped quell investors' skittishness about the financial sector and crude oil prices fell substantially for the second day in a row.
Dow Jones Industrial Average
was adding 251 points to 11,213, while the
was up 27 points to 1242. The
was climbing 65 points to 2281.
Wells Fargo delivered second-quarter earnings that were lower than the year-ago results but ahead of analyst expectations. The bank also announced it would raise its dividend 10%. Shares were rising 23% in recent trading, bringing other banks along for the ride.
, which delivered solid earnings yesterday, were rising today, as were larger banks
Bank of America
. Bank of America rose even as Fitch Ratings cut its issuer default rating for the company, citing worsening credit and lending markets.
Wells Fargo's earnings are important because the bank was based on the West Coast, where many of the most overpriced homes were built, said Marc Pado, U.S. market strategist at Cantor Fitzgerald. After numerous analyst warnings that this quarter would be grim for the financials, it was significant that Wells Fargo emerged with solid earnings.
"It's actually got coattails here," said Pado of the broad rise in the financials. He said that the problems are not over and that there are banks that were swept up in the Wells Fargo exuberance that didn't really deserve the positive attention. He said that once the larger banks such as Citigroup report, investors will be able to turn to other sectors of the market that are actually performing well, such as technology stocks and multinationals.
Following yesterday's announcement by the
Securities and Exchange Commission
that it was cracking down on naked short-selling of pummeled mortgage companies
, shares of both were each soaring more than 18%. The two had been the focal point of the market's recent declines as the government developed a plan this weekend to offer support to their capital levels.
Chairman Ben Bernanke made his second appearance before Congress in two days. He reaffirmed the Fed's commitment to increasing stability in the financial markets as he defended the plan to intervene on behalf of Fannie and Freddie. He said the government-sponsored entities are well-capitalized and are not in danger of failing.
A rise in oil inventories contributed to today's decline in oil prices. After falling more than $6 in Tuesday's session, the largest daily decline since 1991, crude oil was lately down $4.57 at $134.17. Crude oil inventories for the week ended July 12 increased by 3 million barrels. Distillate inventories rose 3.2 million barrels, and gasoline inventories rose by 2.4 million barrels.
The inventory numbers alone didn't tell the whole story, said Pado. After crack spreads had narrowed so dramatically, investors were surprised that the refineries didn't cut back on production, he said. He said that a drop in the demand for gasoline is showing that at $4 a gallon, people stop driving, and that reveals a key price point.
Gold was recently up 10 cents to $962.80.
After Tuesday's close, technology bellwether
reported a second-quarter profit of $1.6 billion, or 28 cents a share, up from 22 cents a share in the year-ago quarter and ahead of analysts' expectations.
Railroad service provider
also reported following the close, delivering in-line pro forma earnings of $365 million, or 89 cents a share, up from 71 cents a share a year ago.
The arrival of the new day brought with it more earnings.
posted a profit, excluding one-time charges, of 35 cents a share, beating the consensus estimate culled by Thomson Financial. American Airlines operator
also bettered estimates.
announced that its profit rose 34% year over year to $1.32 billion, or 85 cents a share, beating expectations of 79 cents a share.
Among materials companies, iron-ore provider
said it will buy coal miner
Alpha Natural Resources
for $10 billion in cash and stock.
Over in the energy patch, which was broadly hurting on falling oil,
led the decliners, dropping 5%.
beat the trend, rising as it named former
Royal Dutch Shell
executive Lynn Laverty Elsenhans as its new CEO.
Traders have a hefty batch of economic data to contend with, as well. The Bureau of Labor Statistics' consumer price index rose 5% year over year, its biggest increase since May of 1991. Sequentially, the CPI rose 1.1% for June, up from 0.6% in May and above analysts' predictions of 0.7%. The core CPI figure increased 0.3% for June, up from a 0.2% increase for May.
The Fed reported a 0.5% increase in industrial production for June vs. a 0.2% decline in May. For the second quarter, production declined 3.1% sequentially. June capacity utilization increased to 79.9%, a reading that was ahead of economists' predictions of 79.4%.
Investors also got a look at the minutes from the June 25 Fed meeting, where the central bank had elected to leave its target interest rate unchanged at 2%. The Fed noted strong profits and cash flow outside of the financial sector, and its notes revealed concern about increasing inflation pressures due to the rise in oil, energy and food prices.
As for Treasuries, the 10-year note was losing 25/32 in price, yielding 3.92%. The 30-year was dropping 1-20/32 to yield 4.56%. The dollar was gaining against the euro and the pound, but slipping against the yen.
World markets were mixed. London's FTSE was lower, while Frankfurt's DAX, Japan's Nikkei and Hong Kong's Hang Seng were edging higher.