Market surges on Wells Fargo earnings surprise
NEW YORK — Stocks surged Thursday to their highest levels in two months after banking giant Wells Fargo & Co. surprised the market with an early profit report that blew past analysts’ expectations thanks to a strong pickup in its lending business.
The Dow Jones industrial average jumped nearly 250 points and major market indexes logged their fifth straight week of gains. Markets are closed for Good Friday.
Investors have been grasping at any sign of improvement in the crippled banking industry, and Wells Fargo’s report Thursday that it expects first-quarter earnings of $3 billion provided an encouraging sign that a deep freeze in borrowing activity may finally be thawing. Wells Fargo said it benefited from its January acquisition of Wachovia and an increase in mortgage applications.
“The fact that Wells Fargo can have record profits despite the troubles facing the banking system tells you something,” said Rick Campagna, chief investment officer at 300 North Capital in Pasadena, Calif. “It’s very good news.”
According to preliminary calculations, the Dow rose 246.27, or 3.1 percent, to 8,083.38. It was the blue chips’ first close above the 8,000 mark in nearly a week and the highest finish since Feb. 9. The Dow hadn’t logged five straight weekly gains since Oct. 2007, the stock market’s peak.
Broader stock indicators also jumped. The Standard & Poor’s 500 index rose 31.40, or 3.8 percent, to 856.56, while the Nasdaq composite index rose 61.88, or 3.9 percent, to 1,652.54.
The report from Wells Fargo injected a decisively upbeat tone into the market after three days of choppy trading earlier this week, when stocks appeared to be taking a breather after barreling ahead more than 20 percent in March. Analysts see occasional pullbacks as signs of a healthy market as investors allocate money carefully instead of just following a frenzied crowd.
© Copyright 2009 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.