Stocks Get Big Boost From Tech, Energy
Thursday, July 16, 2009
A rally in the technology and energy sectors helped spur a broad Wall Street rebound yesterday, lifting stocks to their highest levels in a month.
The Dow Jones industrial average climbed 3.1 percent, or 256.72 points, to close at 8616.21 -- the biggest point gain for the blue-chip index since March. The broader Standard & Poor's 500-stock index was up nearly 3 percent, or 26.84 points, to close at 932.68, while the technology-heavy Nasdaq composite index received the biggest lift, climbing 3.5 percent, or 63.17 points, to 1862.90.
Stocks have languished in recent weeks as investors feared that the recession would be more difficult than expected to escape. But traders have recently regained some footing, sending the Dow up 5.8 percent so far this week, and the S&P and Nasdaq up 6.1 percent.
The rally yesterday was sparked by better-than-expected earnings from Intel. The Silicon Valley chip giant reported a loss during the quarter and that sales slipped compared with the same period last year. The company's results were also weighed down by a charge for a $1.45 billion antitrust fine from the European Commission.
But analysts were impressed by the company's projection that personal computer sales had already begun to improve and would strengthen further in the second half of the year. The results also marked the company's best first-quarter to second-quarter growth since 1988, according to an Intel statement.
Intel and Goldman Sachs kicked off what is expected to be a dismal earnings season this week by beating analysts' expectations. Investors are hoping for signs that corporations can not only beat low earnings projections but present signs that the slump in consumer spending is easing, analysts said. Google, J.P. Morgan Chase and General Electric are all scheduled to report earnings this week.
"We already know companies are cutting costs" to help them meet low earnings expectations, said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "We would like to see revenue hold up, we want to see a more favorable outlooks."
Meanwhile, energy stocks rallied yesterday as crude oil prices jumped 3.4 percent, to $61.54 a barrel on the New York Mercantile Exchange. Exxon Mobil and Chevron were up 3.4 percent and 2.5 percent, respectively, while ConocoPhillips climbed 2.7 percent.
Investors shrugged off mixed economic news. The nation's factories cut production again last month, but not as much as expected. And a spike in energy prices led to a 0.7 percent increase in consumer prices. Meanwhile, the Federal Reserve forecast that the country's unemployment rate could rise to about 10 percent by the end of the year. The unemployment rate reached 9.5 percent last month.
Investors are more focused on what the second half of the year will bring than more evidence of a weak economy, analysts said. "As long as the economic news is no worse than expected, then they will focus on earnings, which has been better than expected," said Doug Roberts, chief investment strategist for the New Jersey-based Channel Capital Research Institute.