Strong Earnings Launch Dow to Multi-Year High
FOX Business: The Power to Prosper
Big-name companies like Ford and 3M unveiled solid first-quarter earnings, igniting a broad rally for stocks.
The Dow Jones Industrial Average climbed 115 points, or 0.93%, to 12,595, the S&P 500 was up 12 points, or 0.9%, to 1,347 and the Nasdaq Composite gained 22 points, or 0.77%, to 2,848. The FOX 50 was up 7 points to 943.
Every major sector advanced on the day, with transportation companies like Delta Airlines (NYSE:DAL) and CSX (NYSE:CSX) gaining markedly. Materials issues such as Barrick Gold (NYSE:ABX) and Silver Wheaton (NYSE:SLW) lagged behind.
Ford (NYSE:F) posted its best results in 13 years. The company reported earnings of 62 cents a share, excluding one-time charges, easily topping consensus estimates of 50 cents. The automaker benefited from strong demand for fuel efficient vehicles and strong global growth.
3M (NYSE:MMM) also beat Wall Street's forecasts, unveiling first-quarter earnings of $1.49 a share, excluding one-time charges, compared with expectations of $1.44 a share. United Parcel Service (NYSE:UPS) said it earned 88 cents a share during the quarter, besting calls of 85 cents.
IBM (NYSE:IBM) boosted its quarterly dividend by 15% and authorized an additional $8 billion in share buy backs. Big blue's shares hit a lifetime high on the day.
Fresh data from the Conference Board showed consumer sentiment edged higher in April. Consumer confidence was up to 65.4 in April from a revised 63.8 in March, with both views of the present situation and future expectations improving.
"A still improving labor market seems to be offsetting the rise in gasoline and food prices for now in terms of consumer psyche," wrote Peter Boockvar, managing director at Miller Tabak + Co., in a research note.
Indeed, consumers' assessment of the current conditions hit its highest mark since November 2008. Economists forecast a reading of 64.5 for the month.
Consumer-driven issues such as Coach (NYSE:COH) and Best Buy (NYSE:BBY) could be affected by these data.
Home prices fell 3.3% on a year-over-year basis and 1.1% on a month-over-month basis in February, according the the S&P/Case-Shiller home price index. Data released by the Commerce Department Monday showed sales of new homes jumping 11% in March, but the median home price falling to $213,800 $224,800.
“There is very little, if any, good news about housing. Prices continue to weaken, trends in sales and construction are disappointing.” said David M. Blitzer, chairman of the Index Committee at S&P Indices, in a release.
Economists are also eagerly awaiting the statement from the Federal Reserve Open Market Committee Wednesday on its plans for U.S. monetary policy. The markets expect the committee to say it will end its controversial long-term treasury buying program, referred to as QE2, in June, and keep interest rates at historically low levels for the foreseeable future. The Fed has been grappling with its goal of keeping both inflation and unemployment low.
Fed Chairman, Ben Bernanke, will also be directly addressing questions from journalists after the meeting -- a first for the central bank.
"Wednesday afternoon will mark a watershed in Federal Reserve communications strategy," wrote Andrew Tilton, senior economist at Goldman Sachs, in a note.
In energy markets, oil prices have been little changed so far for the week, but have jumped more than 20% for the year.
Light, sweet crude settled lower by 7 cents, or 0.06%, to $112.21 a barrel. The price of gas at the pump continues ticking higher. A gallon of regular gas costs $3.87 a gallon on average nationwide, up from $3.58 last month and $2.85 last year.
The U.S. dollar hit a fresh 2011 closing low against the euro on Tuesday and is down 8.5% on the year. The euro gained 0.31% against the greenback, and the dollar slumped 0.16% against a basket of world currencies.
In metals, gold prices fell from a record high Tuesday, snapping an 8-day winning streak. The metal traded lower by $5.60, or 0.37%, to $1,503.
U.S. Steel (NYSE:X) posted a first-quarter loss of 60 cents as compared with $1.10 a year ago and said it expects high steel prices would lead to significant profits in the next quarter.
Netflix (NASDAQ:NFLX) earned $1.11 a share in the first quarter -- a year-over-year increase of 88% -- on 69% growth in global subscribers. However, the video rental and streaming service said it expects to earn between 93 cents and $1.15 in the current quarter, spooking traders.
Lawson Software (NASDAQ:LWSN) is being taken private by Golden Gate Capital and Infor in a deal valued at roughly $2 billion.
Coca-Cola (NYSE:KO) revealed first-quarter profits of 86 cents a share, missing analysts' estimates by a penny. Losses in revenue caused by the earthquake and tsunami that slammed Japan in March caused a 1 cent decrease on the largest soft-drink company's bottom line.
Express Scripts' (NYSE:ESRX) price target was cut to $71 from $79 by analysts at JMP Securities.
The English FTSE 100 gained 0.85% to 6,069, the French CAC 40 was up 0.58% to 4,045 and the German DAX climbed 0.84% to 7,357.
In Asia, the Japanese Nikkei 225 tumbled 1.2% to 9,559 and the Chinese Hang Seng was off 0.54T to 24,007.