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 increase 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 were closed on 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.”
The Dow and the Standard & Poor’s 500 index ended at their highest levels since Feb. 9 and the Nasdaq posted its highest finish of the year, giving it a gain of 4.8 percent for 2009.
The Dow rose 246.27, or 3.1 percent, on Thursday to 8,083.38.
Broader stock indicators also put up big gains. The Standard & Poor’s 500 index rose 31.40, or 3.8 percent, to 856.56. The Nasdaq composite index rose 61.88, or 3.9 percent, to 1,652.54.
For the week, the Dow added 66 points, 0.8 percent. The blue chips hadn’t logged five straight weekly gains since October 2007, when the stock market hit its peak. Since the rally began March 10, the Dow has gained 22 percent, the best performance since 1933.
Even with the rapid rise in the past month the Dow is still down by 42.9 percent from its Oct. 9, 2007, high.
The S&P 500 rose 14.06, or 1.7 percent, for the week, while the Nasdaq added 30.67, or 1.9 percent.
Wells Fargo’s announcement injected a decisively upbeat tone into the market after three days of choppy trading. For most of the week stocks appeared to be taking a breather after barreling ahead in March. Analysts see occasional pullbacks as signs of a healthy market as investors allocate money carefully instead of just following a frenzied crowd.
In other trading Thursday, the Russell 2000 index of smaller companies jumped 26.08, or 5.9 percent, to 468.20.
About seven stocks rose for every one that fell on the New York Stock Exchange. Consolidated volume came to 7.3 billion shares compared with a light 5.07 billion shares traded Wednesday.
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