(Source: Business Week)
U.S. stocks closed sharply higher Wednesday, extending a global advance on stronger-than-expected earnings and economic reports. The Nasdaq composite index led the way with a 3.5% jump after Intel's better-than-expected earnings report after the close Tuesday lifted sentiment in the technology sector.
Some of the buying was triggered by a greatly improved New York Fed Empire State manufacturing index. Traders also eyed reports showing a higher-than-expected increase in consumer inflation in June; and an as-expected decline in June industrial production.
In the minutes from the Federal Reserve's June 23-24 policy meeting released Wednesday, policymakers raised the Fed's economic growth outlook but worried about the labor market.
On Wednesday, the 30-stock Dow Jones industrial average finished higher by 256.72 points, or 3.07%, at 8,616.21.
The broad Standard & Poor's 500-stock index gained 26.84 points, or 2.96%, to 932.68.
The tech-heavy Nasdaq composite index jumped 63.17 points, or 3.51%, to 1,862.90.
S&P MarketScope. noted a short squeeze Wednesday before Friday's Quadruple Witching expiration of futures and options.
Treasuries and the dollar fell. Gold futures soared. Oil rallied after the weekly U.S. inventory report showed crude oil stocks fell 2.8 million barrels.
Economic data released Wednesday gave speculators hope the recession is winding down, says S&P MarketScope.
The market was awaiting Thursday's reports on weekly initial jobless claims and the Philadelphia Fed index.
Shares of Intel Corp. (INTC) climbed Wednesday after the company's quarterly results and outlook blew past Wall Street forecasts on better-than-expected consumer demand for PCs, especially in Asia. Intel projected third-quarter revenue at $8.1 billion to $8.9 billion, compared with analysts' average forecast of $7.8 billion, according to Reuters Estimates.
Capital One Financial (COF) shares were solidly higher after the company released June default statistics on its credit card and auto trust portfolios. S&P says, specifically, U.S. credit card default rates totaled 9.73% in June, only a 3.4% sequential increase vs. a 9.9% sequential increase in the previous month.
American Express shares also rose on news that its charge-card writeoffs will be lower than previously expected.
In economic news Wednesday, U.S. industrial production fell 0.4% in June, with capacity utilization dropping to 68.0%. Markets expected a -0.7% drop and 67.9% reading, respectively. May industrial production was revised up to -1.2% [previously -1.1%]. Manufacturing production fell 0.6%, on a 2.6% decline in autos and a 4.9% drop in apparel and leather products. Manufacturing capacity utilizations fell to 64.6% from 64.9%.
