NEW YORK: US stocks racked up strong gains on Wednesday, sparked by results from bellwether Intel Corp that lifted hopes for a rebound in technology spending and improved corporate profitability.
The broad S&P 500 has gained 6.1 percent so far this week, its best three days since the rally began in March, as companies, including Intel and Goldman Sachs Group, posted much better-than-expected results.
The current earnings season is key as investors look for evidence to support optimism for an economic recovery.
In a sign that consumers might be faring better than feared, US credit card companies said defaults and delinquencies were lower in June than expected. American Express forecast better business in the second half of the year, pushing its stock up 11.3 percent to $27.22. For details, see
Optimism was further reinforced by manufacturing data that suggested the recession is abating, as well as minutes from the Federal Reserve's most recent policy-setting meeting that showed officials judged that the US economy's contraction was slowing.
But Intel set the tone with earnings that handily beat forecasts on better-than-expected consumer demand for personal computers. It also gave a strong outlook and shares of the world's largest chip maker shot up 7.3 percent to $18.05.
"Intel is the guts of the whole technology industry, so when they're talking about consumers getting more active on the PC front, that augers well for a lot of different things," said David Katz, chief investment officer at Matrix Asset Advisors in New York.
The Dow Jones industrial average rose 256.72 points, or 3.07 percent, to 8,616.21. The Standard & Poor's 500 Index gained 26.84 points, or 2.96 percent, to 932.68, its best gain in nearly two months and putting it solidly back into the black for the year. The Nasdaq Composite Index jumped 63.17 points, or 3.51 percent, to 1,862.90.
Along with technology shares, the financial sector led the way higher, with the S&P financial index climbing 4.1 percent. Hopes that banks will report better-than-anticipated quarterly results fuelled Monday's rally. JPMorgan, which releases its scorecard on Thursday, gained 4.5 percent to $36.26.
Intel's results lifted rival Advanced Micro Devices shares, pushing AMD up 8.7 percent to $3.86 on the New York Stock Exchange, while the PHLX semiconductor index jumped 4.4 percent.
Tech will likely continue to be in the spotlight on Thursday with results expected from bellwethers International Business Machines and Google. IBM gave the Dow its biggest boost. IBM's stock climbed 3.9 percent to $107.22 on the NYSE, while Google's shares gained 3.2 percent to $438.17 on Nasdaq.
On the economic front, separate reports showed both industrial output and New York factory activity declined at a slower pace, while consumer prices edged up moderately. The New York Federal Reserve Bank's Empire State business index registered its strongest level since April 2008.
Minutes from last month's FOMC meeting showed central bank policy-makers thought economic growth would resume in the second half of the year, although the economy remained vulnerable.
(Reuters)
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