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Wall Street jumps on positive earnings, home sales data

Wall Street jumps on positive earnings, home sales data
AFP
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First Published: Wed, Feb 03 2010. 09 58 AM IST
Updated: Wed, Feb 03 2010. 09 58 AM IST
New York: US stocks rallied Tuesday on the back of strong fourth quarter earnings reports and home sales data that suggested economic activity is picking up.
The Dow Jones Industrial Average rose 111.32 points (1.09%) to 10,296.85 as the market chalked up a second day of strong gains.
The Nasdaq composite added 18.86 points (0.87%) to 2,190.06 while the Standard & Poor’s 500 index climbed 14.13 points (1.30%) to 1,103.31.
The market reacted to a series of earnings of companies such as delivery giant UPS, an economic bellwether, chemicals behemoth Dow Chemical and builder D.R. Horton, all of which exceeded analysts’ forecasts, reinforcing the notion of a recovering economy.
The National Association of Realtors also reported that its index for pending sales of previously owned homes increased by 1% to 96.6 in December from a revised 95.6 in November, easing fears over the troubled housing sector. The index captures prospects of existing home sales.
“Encouraging signs about the housing market fanned the bullish flames today,” said Andrea Kramer of Schaeffer’s Investment Research.
Better-than-expected earnings reports as well as merger and acquisition activity especially in the financial sector were also helping provide some resiliency to the bulls, analysts said.
“Overall, the fundamental drivers still look good. Earnings growth is robust, inflation is low and so are interest rates,” said Patrick O’Hare of Briefing.com.
Frederic Dickson, chief market strategist for DA Davidson, said the flow of data showed the economy was performing better than expected.
“Signs of incremental economic recovery continue to translate into improving fundamentals for many companies, including slow upward revenue growth to accompany profit growth,” he said.
“Unfortunately, these signs remain hidden for the many businesses on Main Street still hurting as they face extreme difficulties obtaining basic financing to support their businesses as personal lines of finance are finally drying up.”
UPS ended 0.39% higher at $58.62, Dow Chemical shed 3.70 % to 27.57 dollars and D.R. Horton was up 10.92% to $13.21.
Bank of New York Mellon dipped 1.08% to $29.26 after it announced it would buy rival PNC Financial Services’s back-office services unit for $2.31 billion dollars.
Investment bank Goldman Sachs rose 2.49% to $156.94 amid reports its private equity unit has emerged as a leading contender to acquire a minority stake in a Chinese life assurer being sold by French insurance group Axa.
US food giant Kraft Foods added 1.57% to $28.50 after announcing it succeeded in its takeover of British rival Cadbury.
The bond market was up slightly. The yield on the 10-year US Treasury bond fell to 3.635% from 3.654% Monday and that on the 30-year bond dipped to 4.550% from 4.569%.
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First Published: Wed, Feb 03 2010. 09 58 AM IST
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