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Wall Street gains on better-than-expected profit reports
Source: Agencies |
February 6, 2009, Friday
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Online Edition
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WALL Street is getting a little daring once again.
Investors shook off weak economic readings yesterday and placed bets on retail and technology stocks after several companies posted better-than-expected sales and profit reports. The major indexes gained more than 1 percent, including the Dow Jones industrial average, which rose 106 points.
Retailers including Wal-Mart Stores Inc. and Macy's Inc. turned in better-than-expected sales figures for January.
Wal-Mart's sales beat Wall Street's forecasts after the chain drew shoppers focused on necessities like groceries. Macy's, which this week said it would slash 7,000 jobs, on yesterday raised its fourth-quarter and full-year forecasts after reporting its sales.
The industry's overall numbers were still weak as consumers again curtailed their spending, but not as bad as investors feared when they beat retail stocks down in recent months.
"We're being overly pessimistic on things like retailers," said Chris Cordaro, chief investment officer at RegentAtlantic Capital LLC in Morristown, New Jersey. "People realize you're going to have shop somewhere."
The technology-laden Nasdaq composite index led the major market indicators after Akamai Technologies Inc. said its fourth-quarter earnings rose a better-than-expected 13 percent as more customers signed up for its Internet traffic-management services.
"The economy at some point will recover and when it does, tech is a pretty interesting play," said Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto. "It will likely be one of the first movers."
The reports helped the market overcome a flurry of bad economic news. Unemployment benefits claims rose last week to a 26-year high, and factory orders fell for the fifth straight month in December. However productivity rose by 3.2 percent in the fourth quarter, more than twice what analysts expected.
Investors are bracing for Friday's January employment report from the Labor Department. The monthly reading is one of the most important economic indicators because rising unemployment cuts into how much consumers spend. Consumer spending accounts for more than two-thirds of US economic activity.
"There are some indications tomorrow's unemployment report might not be as bad as expected," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.
A poor reading could deliver a big blow to the market, though expectations are low. Economists predict the unemployment rate rose to 7.5 percent in January from 7.2 percent in December. That would be the highest rate in 17 years.
The Dow industrials rose 106.41, or 1.34 percent, to 8,063.07. The Dow fell as much as 111 points early in the session.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 13.62, or 1.64 percent, to 845.85, and the Nasdaq composite index rose 31.19, or 2.06 percent, to 1,546.24.
The Russell 2000 index of smaller companies rose 6.60, or 1.47 percent, to 455.08.
Advancing issues outnumbered losers by about 2 to 1 on the New York Stock Exchange, where volume came to 1.63 billion shares.
Bond prices were mixed yesterday. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, fell to 2.92 percent from 2.94 percent late Wednesday. The yield on the three-month T-bill was flat at 0.28 percent from late Wednesday.
The gains in stocks came as investors again looked to Washington for help on the economy. Wall Street is waiting for a US$920 billion economic stimulus plan to pass the Senate. Debate in the Senate continued for the fourth day yesterday.
Financial stocks recovered from early losses and helped lift the market following speculation the government could funnel aid to regional banks. Bank stocks also rose on reports that Treasury Secretary Timothy Geithner and other top officials are nearing completion of a plan to overhaul the government's US$700 billion financial rescue program. A Treasury official told The Associated Press that Geithner will deliver a speech on Monday outlining the new plan.
Bank stocks moved higher. JPMorgan Chase & Co. rose 50 cents, or 2.1 percent, to US$24.54, and PNC Financial Services Group Inc. rose US$1, or 3.5 percent, to US$29.83.
Regional banks also rose. Huntington Bancshares Inc. jumped 35 cents, or 24 percent, to US$1.79. Regions Financial Corp. rose 33 cents, or 13 percent, to US$2.83.
Retailers climbed after issuing their sales reports. Wal-Mart rose US$2.14, or 4.6 percent, to US$48.56, while Macy's rose 43 cents, or 5.2 percent, to US$8.75.
Among tech stocks, Akamai rose US$2.56, or 18 percent, to US$16.73.
Investors shook off weak economic readings yesterday and placed bets on retail and technology stocks after several companies posted better-than-expected sales and profit reports. The major indexes gained more than 1 percent, including the Dow Jones industrial average, which rose 106 points.
Retailers including Wal-Mart Stores Inc. and Macy's Inc. turned in better-than-expected sales figures for January.
Wal-Mart's sales beat Wall Street's forecasts after the chain drew shoppers focused on necessities like groceries. Macy's, which this week said it would slash 7,000 jobs, on yesterday raised its fourth-quarter and full-year forecasts after reporting its sales.
The industry's overall numbers were still weak as consumers again curtailed their spending, but not as bad as investors feared when they beat retail stocks down in recent months.
"We're being overly pessimistic on things like retailers," said Chris Cordaro, chief investment officer at RegentAtlantic Capital LLC in Morristown, New Jersey. "People realize you're going to have shop somewhere."
The technology-laden Nasdaq composite index led the major market indicators after Akamai Technologies Inc. said its fourth-quarter earnings rose a better-than-expected 13 percent as more customers signed up for its Internet traffic-management services.
"The economy at some point will recover and when it does, tech is a pretty interesting play," said Subodh Kumar, global investment strategist at Subodh Kumar & Associates in Toronto. "It will likely be one of the first movers."
The reports helped the market overcome a flurry of bad economic news. Unemployment benefits claims rose last week to a 26-year high, and factory orders fell for the fifth straight month in December. However productivity rose by 3.2 percent in the fourth quarter, more than twice what analysts expected.
Investors are bracing for Friday's January employment report from the Labor Department. The monthly reading is one of the most important economic indicators because rising unemployment cuts into how much consumers spend. Consumer spending accounts for more than two-thirds of US economic activity.
"There are some indications tomorrow's unemployment report might not be as bad as expected," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York.
A poor reading could deliver a big blow to the market, though expectations are low. Economists predict the unemployment rate rose to 7.5 percent in January from 7.2 percent in December. That would be the highest rate in 17 years.
The Dow industrials rose 106.41, or 1.34 percent, to 8,063.07. The Dow fell as much as 111 points early in the session.
Broader stock indicators also rose. The Standard & Poor's 500 index rose 13.62, or 1.64 percent, to 845.85, and the Nasdaq composite index rose 31.19, or 2.06 percent, to 1,546.24.
The Russell 2000 index of smaller companies rose 6.60, or 1.47 percent, to 455.08.
Advancing issues outnumbered losers by about 2 to 1 on the New York Stock Exchange, where volume came to 1.63 billion shares.
Bond prices were mixed yesterday. The yield on the benchmark 10-year Treasury note, which moves opposite to its price, fell to 2.92 percent from 2.94 percent late Wednesday. The yield on the three-month T-bill was flat at 0.28 percent from late Wednesday.
The gains in stocks came as investors again looked to Washington for help on the economy. Wall Street is waiting for a US$920 billion economic stimulus plan to pass the Senate. Debate in the Senate continued for the fourth day yesterday.
Financial stocks recovered from early losses and helped lift the market following speculation the government could funnel aid to regional banks. Bank stocks also rose on reports that Treasury Secretary Timothy Geithner and other top officials are nearing completion of a plan to overhaul the government's US$700 billion financial rescue program. A Treasury official told The Associated Press that Geithner will deliver a speech on Monday outlining the new plan.
Bank stocks moved higher. JPMorgan Chase & Co. rose 50 cents, or 2.1 percent, to US$24.54, and PNC Financial Services Group Inc. rose US$1, or 3.5 percent, to US$29.83.
Regional banks also rose. Huntington Bancshares Inc. jumped 35 cents, or 24 percent, to US$1.79. Regions Financial Corp. rose 33 cents, or 13 percent, to US$2.83.
Retailers climbed after issuing their sales reports. Wal-Mart rose US$2.14, or 4.6 percent, to US$48.56, while Macy's rose 43 cents, or 5.2 percent, to US$8.75.
Among tech stocks, Akamai rose US$2.56, or 18 percent, to US$16.73.
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