US markets posted their largest gains in a month yesterday after banks led a string of quarterly results that beat Wall Street expectations.
Goldman Sachs, US Bancorp, Coca-Cola and Johnson & Johnson all topped analysts’ forecast for the first three months of the year despite the still subdued US economy.
The Dow Jones industrial average rose 1.5 per cent to close at 13,115.54. The Standard & Poor’s 500 Index gained 1.55 per cent to 1,390.78 and the Nasdaq Composite climbed 1.82 per cent to 3,042.82.
“People were very pessimistic, marking down earnings expectations so there was plenty of room for the market to be positively surprised,” said Paul Zemsky, head of asset allocation at ING Investment Management.
The rises reflect a surprisingly strong beginning to US earnings season, with 29 out of the 39 S&P firms to have reported so far beating analysts’ estimates.
One bank narrowly came in below expectations, however. State Street said first-quarter profit fell 11 per cent. The Boston-based custody bank’s net income was $417m, or 85 cents a share, including preferred stock dividends and other adjustments. Analysts’ average forecast was 86 cents a share.