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Wall Street rallies as euro-zone fears wane

Wall Street rallies as euro-zone fears wane
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First Published: Thu, May 13 2010. 08 57 AM IST
Updated: Thu, May 13 2010. 08 57 AM IST
New York: US stocks capped their best three-day run in 10 months on Wednesday boosted by technology and industrial shares, after Spain unveiled an austerity plan that reassured investors Europe was addressing its fiscal ills.
Spain said it will slash civil service pay and cut public-sector jobs, just a few days after EU finance ministers approved a 750 billion euro ($1 trillion) bailout package to stem the debt crisis, cheering investors.
“The guarantees have placated investors for the time being,” said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.
Investors have worried that a European debt crisis that began in Greece could spread around the world and potentially curb global growth.
Technology shares posted the most gains as International Business Machines Corp forecast roughly doubling its profit by 2015 a day after Intel Corp said it expects annual earnings growth to double over the next few years.
IBM shares jumped 4.6% to $132.68 and Intel rose 3.6% to $23.09. Fellow Dow component DuPont gained 4.2% to $39.26.
Morganlander said the expectation of growth in Europe will spur a sector rotation into highly cyclical sectors, including technology and industrials.
The Dow Jones industrial average rose 148.65 points, or 1.38%, to 10,896.91. The Standard & Poor’s 500 Index added 15.88 points, or 1.37%, to 1,171.67. The Nasdaq Composite Index gained 49.71 points, or 2.09%, to 2,425.02.
Baidu Inc jumped 9.6% to $78.30 as investors snapped up the Chinese Internet search giant’s stock following its 10-for-1 share split.
CISCO DROPS, WHOLE FOODS FLIES
Adding to the technology news, Cisco Systems Inc reported results after the closing bell that showed 27% growth in revenue. Cisco’s stock slid 3.1% to $25.92 in extended-hours trading -- a reversal from the regular session, when it jumped 3% to end at $26.74.
Elsewhere in extended trading, Whole Foods Market Incjumped 5.7% to $42.56 after it reported better-than-expected quarterly earnings and raised its full-year profit and sales forecasts. During regular trading, Whole Foods gained 2% to end at $40.25.
MACY’S AND APPLE GAIN
During the regular session, Macy’s Inc <M.N> stock rose 3.4% to $24.70 during regular market hours after it swung to a first-quarter profit and affirmed its outlook.
On the downside, though, Dow component Walt Disney Co fell 1.8% to $35.13 a day after second-quarter earnings beat expectations. But analysts said results at its television network division were disappointing.
Also on the downside, Morgan Stanley fell 2% to $27.80 after the Wall Street Journal reported U.S. officials were probing whether it misled investors about mortgage derivative products it helped create. The chief executive said he had no knowledge of any federal investigation.
Apple Inc shares rose 2.2% to $262.09, shrugging off a patent infringement case filed by HTC Corp, a maker of phones based on Google Inc’s Android software, that aims to ban US iPhone, iPad and iPod sales.
The materials sector also climbed as the price of gold surged to a second straight record high. On Wednesday, gold climbed as high as $1,249.20 an ounce.
The PHLX gold and silver index rose 1%, with Freeport-McMoRan Copper and Gold Inc up 3.9% at $73.
On the economic front, the US trade deficit widened in March to its highest level in more than a year as both imports and exports rose in a sign of improved US and foreign demand.
About 9.37 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, slightly below last year’s estimated daily average of 9.65 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of about 6 to 1, while on the Nasdaq, about four stocks rose for every one that fell.
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First Published: Thu, May 13 2010. 08 57 AM IST
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