Wall Street rises on earnings relief

STOCKS climbed to a five-month high yesterday, led by materials companies after an upbeat forecast by aluminum company Alcoa and strong gains in bank shares.

Alcoa posted revenue that topped expectations late Monday and gave a bullish outlook for the aluminium industry. The stock gave up early gains to end at $9.44, up 1 cent. However, data showing strong Chinese imports of copper helped buoy the rest of the sector.

The US equity market continued its recent divergence from the woes of the Eurozone. Recent economic reports and optimism about the US earnings season have pushed stocks higher in the start of the new year, with the benchmark S&P 500 rising in five of six sessions.

“Investors are still focusing on Europe but not putting as much weight on Europe as they were in November,” said Jonathan Corpina, head of NYSE floor operations for Meridian Equity Partners in New York.

That focus could change quickly. Key bond auctions later this week from Italy and Spain could hurt sentiment if they go poorly.

“Historically, earnings season has helped the market shift higher – so let’s hang our hats on this for now, but lets not forget about what is going on in Europe,” Corpina said.

Industrial and materials stocks were the day’s biggest gainers. Caterpillar shares were up three per cent at $99.96, leading the Dow index higher.

US bank stocks continued a rebound that has lifted the KBW banks index nearly nine per cent so far this year. The KBW rose 1.9 per cent yesterday. JP Morgan Chase rose 2.1 per cent to $36.05.

Fitch said, however, it does not expect to cut France’s AAA credit rating this year, but countries under review such as Italy or Spain could be downgraded by one or two notches.

The Dow Jones industrial average gained 69.78 points, or 0.56 per cent, to 12,462.47. The Standard & Poor’s 500 Index rose 11.38 points, or 0.89 per cent, to 1,292.08. The Nasdaq Composite Index climbed 25.94 points, or 0.97 percent, to 2,702.50.

The Dow and S&P 500 hit their highest intraday levels in five months. The S&P 500 close above 1,285.09 is the highest since the end of July and marked a breach of technical resistance, which could spur further gains. Copper prices rose 3.1 per cent, the best performance since late November, after China reported copper imports rose to a record high last month.