Wall St rallies on corporate outlook
Upbeat outlooks from economic bellwethers 3M, UPS and Caterpillar catapulted US stocks yesterday as investors shed some of their fears about the strength of the recovery.
The parade of prominent names reporting earnings continued after the market’s close with
Microsoft, whose shares rose 2.9 per cent in regular trading. The software company reported quarterly results after the close and its shares were trading little changed in extended hours.
The major indexes posted their largest daily gains in more than two weeks, led by United
Parcel Service, which rose 5.2 per cent after raising its outlook. The firm is viewed as a
barometer of business demand.
“UPS guiding higher is a very good sign since the amount of shipping volume is directly correlated to the strength of the economy,” said Peter Jankovskis, co-chief investment officer of OakBrook Investments in Lisle, Illinois.
Caterpillar, up 1.7 per cent to $68, and 3M, up three per cent to $84.75, were among multinationals that raised their outlooks, suggesting the global economy may also be on a stronger footing.
“The companies that are doing well generally are the ones that have significant overseas revenues or some kind of unique product,” said Kim Caughey, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
The Dow Jones industrial average gained 201.77 points, or 1.99 per cent, to 10,322.30. The Standard & Poor’s 500 added 24.08 points, or 2.25 per cent, to 1,093.67. The Nasdaq Composite rose 58.56 points, or 2.68 per cent, to 2,245.89.
Yesterday’s rally reversed losses from a day earlier after testimony by Federal Reserve Chairman Ben Bernanke soured investors on the economic outlook. But for the fourth time this month the S&P 500 failed to break through 1,100, a level that is proving to be a tough hurdle and could be in the way of further gains.
Also, data showed weekly applications for unemployment insurance rose. Job growth has slowed after strong gains early in the year, cutting into household spending and holding back the economy’s recovery from the toughest recession since the 1930s.