US stocks scored their biggest gains in a month yesterday after Coca-Cola led a round of strong earnings and as concerns about Europe’s debt crisis eased as Spanish bond yields fell.
Apple shares ended a five-day losing streak with a rally of 5.1 per cent, helping the Nasdaq Composite close above 3,000.
The stock closed at $609.70 and booked its best day in almost three months after it dropped 8.8 per cent in the previous five sessions.
IBM, Intel and Yahoo all beat earnings estimates in their reports after the closing bell.
Earlier in the day, Coca-Cola, Goldman Sachs and Johnson & Johnson all reported profits that beat analysts’ estimates, in what has been a surprisingly strong start to earnings season.
“People were very pessimistic, marking down earnings expectations so there was plenty of room for the market to be positively surprised,” said Paul Zemsky, the New York-based head of asset allocation at ING Investment Management.
The stocks of companies whose results exceeded forecasts did not all rise. But the better-than-expected results helped ease fears that earnings could start to tail off this quarter. Of the 39 S&P 500 companies that had reported earnings before yesterday’s opening bell, 74.4 per cent beat estimates, according to Thomson Reuters data.
German analyst and investor confidence rose unexpectedly in April to a high not seen since June 2010 while better-than-expected results from Spanish debt sales boosted confidence before a long-term debt auction later in the week.
ING’s Zemsky said it was hard for any market to dismiss the significantly stronger-than-expected German survey.
The benchmark Spanish 10-year note’s yield slipped below six per cent, but worries about Madrid’s finances and the banking sector are likely to keep the pressure on in coming days.
The Dow Jones industrial average rose 194.13 points, or 1.50 per cent, to close at 13,115.54. The S&P 500 Index gained 21.21 points, or 1.55 per cent, to 1,390.78. The Nasdaq Composite climbed 54.42 points, or 1.82 per cent, to 3,042.82.
In yesterday’s rally, each of the three major indexes booked their largest percentage gains since 13 March.
The S&P 500 closed just shy of its 14-day moving average and easily cleared its 50-day average, suggesting a turn in momentum after the recent pullback. The benchmark dipped below the 50-day line last week for the first time in more than three months.
International Business Machines reported a 15 per cent increase in first-quarter earnings after the bell and raised its full-year outlook.