NEW YORK – Wall Street rose on Wednesday after Alcoa got the earnings season under way with better-than-expected revenue and an encouraging outlook for the year.
Alcoa Inc said it expects global demand for aluminum will continue to grow in 2013, though the company kept a cautious tone as worries lingered over a looming U.S. budget confrontation. Shares of Alcoa, the largest aluminum producer in the United States, rose 0.5 percent to $9.18.
Still, investors are wary about the outcome of the fourth-quarter earnings season. Profits were expected to beat the previous quarter's lackluster results, but analyst estimates were down sharply from where they were in October. Earnings were expected to grow by 2.7 percent, according to Thomson Reuters data.
But the lowered expectations leave room for companies to surprise investors even if their results aren't particularly strong, analysts said.
"Clearly no one is expecting a stellar earnings season. With the number of companies that lowered guidance over the last few weeks, I think there's some concern that we could see companies disappoint," said Kate Warne, investment strategist at Edward Jones in St. Louis.
"However, based on the fact that many companies have lowered guidance, that means they've put the bar so low they could crawl over it, and I would expect what we'll see is some relief as earnings come in."
The Dow Jones industrial average gained 67.00 points, or 0.50 percent, to 13,395.85. The Standard & Poor's 500 Index rose 5.50 points, or 0.38 percent, to 1,462.65. The Nasdaq Composite Index added 10.07 points, or 0.33 percent, to 3,101.88.
Among other earnings, Constellation Brands , whose labels include Robert Mondavi and Ravenswood wines, rose 0.4 percent to $36.30 after it reported higher profit and raised its earnings forecast.
Apollo Group Inc slid about 10 percent after it reported lower student sign-ups for the third straight quarter and cut its operating profit outlook for 2013. Apollo's shares were last at $18.83.
Dish Network Corp late Tuesday announced a bid for Clearwire Corp that trumped Sprint Nextel Corp's $2.2 billion offer, setting the stage for a battle over the wireless service provider.
Clearwire was up 7.5 percent at $3.14, while Sprint lost 2 percent to $5.85.
Hard drive maker Seagate Technology rose 4.6 percent to $32.83 after it raised its second-quarter revenue forecast.
(Editing by Kenneth Barry)