U.S. Stock Indexes Rise After Two-Day Slide
U.S. stocks climbed modestly on Wednesday after a two-day drop as Alcoa Inc. raised its outlook, citing expectations of increased global demand for aluminum.
“We started earnings season, but it’s like a preview before a movie — this is coming attractions week,” said Art Hogan, market strategist at Lazard Capital Markets.
Wednesday’s gains had the three major indices up for a third session in six so far this year, with the S&P 500 hitting a five-year high on Friday after the December jobs report had hiring maintaining its two-year pace, indicating the partially resolved budget battle on Capitol Hill had not done significant damage to the U.S. economy.
The Dow Jones Industrial Average rose 61.66 points, or 0.5%, to 13,390.51, with 18 of its 30 components rising.
Alcoa late Tuesday reported better-than-estimated revenue and an upbeat forecast for the year. Read a blog post on the first five days of 2013 being bullish for stocks.
“Alcoa is better, and it is usually not, so it could be a barometer for the global economy or it could be a company that has done a good job of repairing its balance sheet, or it could be a combination of both. The good news is we haven’t had a household name blow up yet,” Hogan said.
Boeing Co. was the top gainer in the Dow, with shares of the aerospace firm rallying 3.6%, rebounding from their decline earlier in the week. Read: Boeing regaining altitude as analyst dismisses 787 ‘teething problems.’
Bank of America Corp. was the top decliner in the Dow, dropping 4.6% after the lender was downgraded to neutral from outperform by Credit Suisse for valuations reasons.
The S&P 500 index gained 3.87 points, or 0.3%, to 1,461.02, with health care leading gains and telecommunications the largest loser of its 10 major industry groups.
The Nasdaq Composite Index added 14 points, or 0.5%, to 3,105.81.
Moving issues
American International Group Inc. on Wednesday said it would not join a lawsuit against the government over terms of the insurer’s 2008 rescue. Its shares ended up 0.3%.
MasterCard Inc. climbed 2.8% after Goldman Sachs Group Inc. upgraded the payments network.
Seagate Technology PLC gained 6.6% after the company projected fiscal second-quarter sales above prior forecasts.
Clearwire Corp. rallied 7.2% after the wireless-network operator drew an unsolicited offer from Dish Network Corp. that exceeded a buyout offer from Sprint Nextel Corp. , which already owns a majority of Clearwire.
Apollo Group Inc. slipped 7.8% after the for-profit educator reported declining enrollment for the third quarter and reduced its operating profit outlook for the year.
For every share falling just over two rose on the New York Stock Exchange, where nearly 672 million shares traded.
Composite volume exceeded 3.6 billion.
“It really is a quiet week as we anticipate an earnings season that begins in earnest next week. The question is, how choppy are the earnings reports, because we expect them to be terrible,” said Hogan of S&P 500 earnings growth that is estimated to rise 2.9% versus the year-ago quarter. “The trick here is when we started the quarter, growth estimates were 9%.”
The question remains whether “there is enough uncertainty with half of the fiscal cliff still unresolved for corporate executives to be upbeat about 2013,” said Hogan of the coming battle over raising the debt ceiling, which was put off as lawmakers reached a last-minute deal to avert steep spending cuts and tax increases known as the fiscal cliff.
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