Wall Street rises on earnings and weak dollar

Reuters

Posted at Oct 14 2010 07:02 AM | Updated as of Oct 14 2010 03:02 PM

NEW YORK – US stock indexes hit their highest level in five months on Wednesday as stronger-than-expected earnings and lingering US dollar weakness increased demand for equities.

Shares in the industrials and materials sectors led the way while commodity prices soared as China's month-on-month import growth hit a record high.

Completing a bullish trifecta, the S&P 500 broke a short-term technical barrier and triggered more buying of stocks as money managers chased performance. The S&P 500 is up 12.3% since September 1.

"There's three months left in the year and a lot of fund managers are watching the clock," said Richard Ross, global technical strategist at Auerbach Grayson in New York.

"In that type of environment, the path of least resistance is often the path you want to be on."

Despite posting strong results that helped lift sentiment, Dow components JPMorgan Chase & Co and Intel Corp saw their shares slide.

JPMorgan slipped 1.4% to $39.84 as its weak revenue highlighted feeble loan demand and declining trading volumes in the industry. The KBW bank index slipped 1%.

Intel dropped 2.7% to $19.24 after its shares had risen in the last six sessions.

Railroad operator CSX Corp jumped 4.2% to $59.66 after it reported stronger-than-expected quarterly profits late Tuesday. The Dow Jones Transportation Average jumped 2.6%.

Further whetting risk appetite and weakening the greenback, details from the Federal Reserve's latest meeting showed Tuesday the US central bank may once again flood markets with cheap cash "before long."

Industrials and materials were the S&P 500's leading sectors. Caterpillar Inc rose 1.2% to $80.29 and Freeport-McMoRan Copper & Gold jumped 4.2% to $99.08.

"From a macro standpoint, we have continued weakness in the US dollar, once again giving rise to large multinationals and driving up dollar-denominated commodities," Auerbach Grayson's Ross said.

The Dow Jones industrial average gained 75.68 points, or 0.69%, to 11,096.08. The Standard & Poor's 500 added 8.33 points, or 0.71%, to 1,178.10. The Nasdaq Composite rose 23.31 points, or 0.96%, to 2,441.23.

The S&P 500 broke a key short-term technical resistance level when it moved above 1,173.57, the highest point it had hit since the market's "flash crash" on May 6.

The next technical barrier for the S&P 500 is at the 2010 high, near 1,220.

Apple pops above $300

Apple Inc moved above $300 for the first time as investors anticipated another strong earnings report from the iPhone maker next week. The stock closed at a record $300.14, up 0.5%, after earlier hitting an all-time intraday high of $301.96.

About 9.18 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq -- the highest day for volume since July 16, and above the year's average so far of about 8.78 billion.

"In the absence of real overhead resistance, there's been an increasing conversion of skeptics (of the stocks' rally) into believers," Ross said.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of slightly more than 3-to-1. On the Nasdaq, about 20 stocks rose for every seven that fell.

S&P 500 companies' earnings are expected to rise 23.6% from a year ago, which would represent a fourth straight quarter of year-over-year earnings increases, according to Thomson Reuters data.

Although the earnings period has just begun, results from 81% of S&P 500 companies have surpassed expectations. The long-term average for beats for an entire reporting period is 61%, Thomson Reuters data showed.