Earnings reports help stocks climb
Investors put their interest rate worries on hold and sent stocks higher Wednesday after strong earnings reports from Time Warner Inc. and Procter & Gamble Co. restored some of the market’s flagging confidence.
Time Warner’s $1 billion profit, compared to a loss a year ago, exceeded the market’s expectations and gave hope to investors disappointed with the media sector’s recent performance. A strong showing from P&G, the consumer products company, assuaged fears of a drop in consumer spending.
Yet with a tropical storm threatening Florida and energy usage soaring in the sweltering eastern United States, rising energy prices threatened to stall the market’s momentum for the rest of the week. A barrel of light crude settled at $75.81, up 90 cents, on the New York Mercantile Exchange, while prices for natural gas — widely used in electricity generation — are sharply higher this week.
Nonetheless, investors sought bargains after two days of selling, pressing ahead despite the Labor Department’s jobs report coming Friday and the Federal Reserve’s latest decision on interest rates, due next week.
“It’s probably wrong to expect much more from the stock market than this when you still have these questions about the Fed that are unanswered,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors. “We have the employment numbers on Friday which will help us with some answers, but for today, this is nice, but uninspiring.”
The Dow Jones industrial average rose 74.20, or 0.67 percent, to 11,199.93.
Broader stock indicators also moved higher. The Standard & Poor’s 500 index climbed 7.63, or 0.6 percent, to 1,278.55, and the Nasdaq composite index gained 16.82, or 0.82 percent, to 2,078.81.
Bonds also moved higher after two days of sideways trading, with the yield on the benchmark 10-year Treasury note falling to 4.96 percent from 4.98 percent late Tuesday. The dollar was mixed against other major currencies; gold prices rose.
Most analysts believed the day’s stock runup would be short-lived, given the fact that the monthly job’s report has been increasingly difficult to predict — as has the Fed’s intentions toward interest rates. Tropical Storm Chris, expected to strengthen into a hurricane as it heads for the oil-rich Gulf of Mexico, could also come into play toward the end of the week.
“If you see that storm head into the gulf, all bets are off,” said Bill Groenveld, head trader for vFinance Investments. “You’re going to see oil spike higher than it is now, and that’ll take things right back down.”
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 2.73 billion shares, compared with 2.55 billion traded Tuesday.
The Russell 2000 index of smaller companies was up 6.92, or 1 percent, at 696.81.
Overseas, Japan’s Nikkei stock average rose 0.15 percent, though markets in Hong Kong and Bombay fared better. In Europe, Britain’s FTSE 100 was up 0.87 percent, France’s CAC-40 climbed 1.58 percent for the session, and Germany’s DAX index gained 1.5 percent.