Just a day after markets' suffered their biggest fall of the
year, a single positive earnings report reversed the benchmarks'
five-day losing streak on Wednesday. Markets' uptrend yesterday was
also boosted by a fall in Spain's borrowing costs, a concern which
had dealt serious injuries to the markets over the last few
days.
The Dow Jones Industrial Average (DJI) gained 0.7% to close at
12,805.39. The Standard & Poor 500 (S&P 500) also jumped
0.7% and finished yesterday's trading session at 1,368.71. The
tech-laden Nasdaq Composite Index moved up 0.8% and settled at
3,016.46. The fear-gauge CBOE Volatility Index (VIX) also slipped
from its path of a continuous uptrend, shedding a meager 1.8% to
close at 20.02. Consolidated volumes on New York Stock Exchange,
the American Stock Exchange and the Nasdaq remained low at 6.31
billion shares, falling behind last year's daily average of 7.84
billion. Advancing stocks on the NYSE stormed past the decliners;
as for 78% stocks that gained, only 20% stocks traded lower. The
remaining 2% stocks were left unchanged.
Yesterday's bounce back was not enough to negate all of the
week's losses and the Dow, S&P 500 and Nasdaq are still down
2%, 2.1%, and 2.1%, respectively, for the week. Nonetheless, after
investors were left distraught by the negative trend of the
benchmarks over the past five trading days, any gains will help to
buoy sentiment. The gains made yesterday not only helped limit the
week's losses and end the losing streak, but also lifted the Nasdaq
back to its key level. Tuesday's 1.8% loss in the tech-laden index
had dragged it below 3, 000, but the gains made yesterday enabled
it to remain 16 points ahead of the key level. However, investors
will have to wait for more positive trends to see the blue-chip
index and S&P 500 climb back to their respective key levels of
13, 000 and 1, 400.
It was Alcoa, Inc.'s (NYSE:
AA
) results that surprised the Street after it declared profits for
the quarter. The largest U.S. aluminum producer reported earnings
per share of $0.09, contrary to estimates of a loss of $0.04 per
share. Alcoa also bounced back to profits after it reported a loss
of $0.18 in the prior quarter. Alcoa, a bellwether in its domain,
is the first among the Dow components to report results, and is
bound to grab investors' attention. This earnings report also
unofficially kick-starts the earnings season, and will surely help
the broader rally. Alcoa's shares jumped 6.2% to lead the gains
among the 30 Dow components, followed by the likes of Cisco
Systems, Inc. (NASDAQ:
CSCO
), The Boeing Company (NYSE:
BA
), Intel Corporation (NASDAQ:
INTC
), AT&T, Inc. (NYSE:
T
) and Verizon Communications Inc. (NYSE:
VZ
), which jumped 2.4%, 1.7%, 1.5%, 1.1% and 1.6%, respectively.
Additionally, Dow components and financial behemoths, Bank of
America Corporation (NYSE:
BAC
) and JPMorgan Chase & Co. (NYSE:
JPM
) surged 3.8% and 2.4%, respectively, following the broader rally
in the financial sector. The financial sector was one of the
leading gainers among S&P's 10 industry groups and the
Financial Select Sector SPDR (
XLF
) gained 1.6%. Among other financial shares, American Express
Company (NYSE:
AXP
), Citigroup, Inc. (NYSE:
C
), The Goldman Sachs Group, Inc. (NYSE:
GS
), Morgan Stanley (NYSE:
MS
) and UBS AG (NYSE:
UBS
) gained 1.4%, 2.2%, 1.2%, 1.2% and 2.4%, respectively.
Separately, news from Europe was on the positive side.
Developments from the continent have dampened investors' mood since
last week. In a sign of improved confidence in the nation's
economic scenario, Spain's 10-year bond yield dropped to 5.8%
yesterday. For the moment, this was a significant enough catalyst
to boost investor sentiment as investors are well aware of the
consequences of surging borrowing costs. Not long ago Ireland,
Portugal and Greece suffered economic turmoil with their borrowing
costs reaching 'unsustainable levels'. Also helping to keep
the positive sentiment alive was European Central Bank's Executive
Board member Benoit Coeure's statement that the Securities Market
Programme (
SMP
) that authorized the ECB to buy euro-zone nations' debt whenever
needed remained intact.
ALCOA INC (
AA
): Free Stock Analysis Report
AMER EXPRESS CO (
AXP
): Free Stock Analysis Report
BOEING CO (
BA
): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis
Report
CITIGROUP INC (C): Free Stock Analysis Report
CISCO SYSTEMS (CSCO): Free Stock Analysis
Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
INTEL CORP (INTC): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis
Report
MORGAN STANLEY (MS): Free Stock Analysis Report
AT&T INC (T): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
VERIZON COMM (VZ): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment
Research