WALL Street resumed its rally yesterday, led by natural resources and tech shares as investors saw stocks regaining momentum lost late last week.
A share-buyback from Dow component Intel helped revive optimism, which has been reinforced by more strong profit reports. Three-quarters of the 84 S&P 500 companies that have reported results so far in this earnings season have beaten analysts’ estimates.
“Strong earnings are what’s pushing the market higher and I don’t see a correction in sight until the [earnings] season is over,” said Keith Springer, president of Springer Financial Advisors in Sacramento, California.
“Even after the earnings, I don’t think we will see a major correction but rather a pause or a breather since there isn’t a major fundamental issue.”
Volatility indicators in the options market also suggested a turnaround after the S&P’s decline last week when the benchmark index fell after seven straight weeks of gains.
But trading volume was the lowest of the year at 7.02 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq. Last year’s estimated daily average was 8.47 billion shares.
Yesterday the Dow Jones industrial average ended up 108.68 points, or 0.92 per cent, at 11,980.52. The Standard & Poor’s 500 Index was up 7.49 points, or 0.58 per cent, at 1,290.84.
The Nasdaq Composite Index was up 28.01 points, or 1.04 per cent, at 2,717.55.
The blue-chip Dow neared the psychologically important 12,000, pulled higher by natural resources stocks like Alcoa while the Nasdaq gained more than one per cent on large-cap tech shares.
Shares of Alcoa jumped four per cent to $16.43 after its chief executive said he sees continued demand for aluminium in 2011.
The S&P materials sector advanced one per cent. Copper prices rose as concerns about a decrease in Chinese demand were replaced by worries over supply constraints.