US stocks rebound on strong earnings
WALL Street snapped its three-day losing streak yesterday thanks to a rebound in commodity prices and Dell’s strong earnings, but investors say stocks still face headwinds.
Yesterday’s bounce gave some respite to selling that has driven the S&P 500 down nearly two per cent this month as soft economic data has put investors on the defensive.
The Dow Jones industrial average gained 80.60 points, or 0.65 per cent, to 12,560.18. The Standard & Poor’s 500 Index rose 11.70 points, or 0.88 per cent, to 1,340.68. The Nasdaq Composite Index added 31.79 points, or 1.14 per cent, to 2,815.00.
“We’re seeing a snap back. Is it sustainable? That is the going to be the million-dollar question,” said David Lutz, managing director of trading at Stifel Nicolaus Capital Markets.
The stock market has slipped in tandem with sharp declines in commodities that have prompted investors to pare their riskiest bets. Some believe it points to a sustained correction, but Wednesday’s action shows fund managers are keen to buy on dips.
US crude oil futures rose more than three per cent to settle back above $100 a barrel as crude inventories unexpectedly fell. Chevron rose 2.4 per cent, giving the Dow one of its biggest lifts.
Exxon Mobil advanced 1.7 per cent. The PHLX oil service sector index climbed 2.6 per cent. The S&P energy index added two per cent and shared the spotlight with materials as the S&P 500’s top-performing sectors.
Dell’s shares jumped 5.4 per cent to $16.75 after the PC manufacturer reported profits late on Tuesday that exceeded expectations. The company also raised its fiscal 2012 outlook for operating income.
Also in the tech sector, microchip maker Analog Devices posted quarterly profit that topped market expectations, sending its shares up 5.9 per cent. The Philadelphia semiconductor index rose 1.9 per cent.
Helping transportation stocks, US railroad operator CSX said it is targeting double-digit growth in earnings per share and operating income through 2015, expecting growth that outpaces the economy.
CSX shares rose 2.2 per cent. The Dow Jones Transportation Average gained 1.6 per cent.
About 6.5bn shares were traded on the New York Stock Exchange, NYSE Amex and Nasdaq, compared with the average of about 8.4bn last year.
Advancing stocks outnumbered declining ones on the NYSE by almost four to one, and on the Nasdaq, by a ratio of about three to one.