US stocks close higher for third day in a row
By ALEX VEIGA
the associated press | April 17,2014
ap file photo
Specialists Frank Masello, left, and John T. O’Hara work on the trading floor of the New York Stock Exchange in New York shortly before the closing bell.
Investors drove stock prices to their highest level in a week Wednesday, encouraged by a crop of corporate earnings and reassuring U.S. and Chinese economic data.
Major U.S. stock indexes notched their third day of gains in a row. Yahoo and Delta Air Lines were among the companies posting big gains. The gains were broad; for every stock that declined, nearly four rose.
The market is coming back from a steep drop at the end of last week led by Internet and biotechnology stocks. That move away from some of the riskier, high-priced stocks that drove down the market is nearly, if not completely done now, said Jim Russell, senior equity strategist at U.S. Bank Wealth Management.
“We did think that last week’s downside volatility would be limited, and we’re very heartened to see a rebound for the first three days this week,” he said.
Stocks started climbing from the opening bell on Wednesday as investors cheered the latest quarterly earnings report from Yahoo. The Web pioneer reported late Tuesday that it is making most of its money from its stakes in two Asian Internet companies: China’s Alibaba Group and Yahoo Japan.
The market also welcomed a Chinese government report showing that the world’s second-largest economy grew 7.4 percent from a year earlier in the January-March quarter. A favorable report on U.S. factory production helped keep investors in a buying mood.
Unlike Monday and Tuesday, the rally didn’t falter during the day. Instead, the buying gained momentum in the afternoon after the Federal Reserve said its latest survey showed economic growth picking up across most of the U.S. over the past two months as bitter winter weather subsided.
“Yesterday was just a crazy day. We were all over the map, and finally today we are showing some strength,” said Erik Davidson, deputy chief investment officer of Wells Fargo Private Bank.
All told, the Standard & Poor’s 500 index rose 19.33 points, or 1.1 percent, to 1,862.31. All ten industry sectors in the S&P 500 increased, led by industrial stocks, including several airlines and transportation companies.
The Dow Jones industrial average added 162.29 points, or 1 percent, to 16,424.85. The Nasdaq composite rose 52.06 points, or 1.3 percent, to 4,086.22.
The three major stock indexes are each up for the week, but remain down for the month after several days of choppy trading. The three-day rise in stock prices helped push the S&P 500 index up 0.8 percent so far this year.
Investors are closely monitoring company earnings this week as they try to assess whether the impact of a severe winter has begun to ease. Financial analysts expect first-quarter earnings for companies the S&P 500 to fall about 1.2 percent, according to S&P Capital IQ.
“It’s not like things are all hunky-dory with the economy, with profits, with revenue, and yet we keep clearing relatively low bars,” Davidson said.
Google and IBM fell sharply in after-hours trading after their quarterly results disappointed investors.
Google’s newly issued Class C stock fell $32.54, or 6 percent, to $524 after the company reported that its growth faltered as online advertising prices continued to fall. IBM’s stock fell $7.45, or 4 percent, to $189 after reporting that its revenue fell from a year ago and came in below what analysts were expecting.
Technology stocks have come under selling pressure in recent weeks as investors question whether the sector has become too expensive. Even after a recent sell-off that brought the tech-heavy Nasdaq composite 6 percent below its recent peak reached Mar. 5, the index is still up 25 percent over the past year, versus 18 percent for the S&P 500.
Yahoo topped the gainers in the S&P 500. The stock jumped $2.14, or 6.3 percent, to $36.35.
Several airline stocks were also among the market’s big risers: Delta Air Lines added $1.71, or 5.4 percent, to $33.62, while JetBlue rose 49 cents, or 6 percent, to $8.80. American Airlines rose $1.79, or 5.3 percent, to $35.51.
Among other the stocks making news Wednesday:
— Bank of America fell 2 percent after booking $6 billion in legal costs over its home loan practices. The stock fell 26 cents to $16.13.
— CSX fell 50 cents, or 1.8 percent, to $27.79. Severe winter weather contributed to a 14 percent drop in the railroad company’s first-quarter earnings.