By Kate Gibson
Positive results from a trio of high-profile market sector
leaders -- Intel Corp., Goldman Sachs Group Inc. and Johnson &
Johnson -- had investors Wednesday taking an optimistic view of the
second-quarter earnings season.
Upbeat earnings surprises "should give investors a reason to
raise their commitment to equities as earnings reporting season
gets under way in full force," said Fred Dickson, chief market
strategist for Davidson Companies.
On Wednesday, investors hiked their exposure to stocks and
commodities, lifting the major stock indexes more than 2%, while
crude-oil futures rose to $61 a barrel.
Up for a third consecutive session, the Dow Jones Industrial
Average (DJI) at 2: 40 stood at 8,584.6, up 225.13 points, or 2.7%.
The S&P 500 Index (SPX) added 23.64 points, or 2.6%, to stand
at 929.48, with materials and information technology shares
fronting the broad market gains, while the Nasdaq Composite (RIXF)
rose 54.79 points, or 3%, to 1,854.5.
Dickson listed Goldman Sachs Groups Inc. (GS), Johnson &
Johnson (JNJ) and Intel Corp. (INTC) as among those offering early
earnings results that should lift investor confidence, "putting a
floor on the recent market pullback and providing incentive for
investors to increase equity exposure."
Goldman on Tuesday reported a second-quarter profit that jumped
65%, with the investment powerhouse's performance during the period
from equity underwriting a company record. .
And in the tech sector, Intel's results furthered its stance
that the computer business is recovering after a tough period, with
the world's largest maker of microprocessors late Tuesday offering
better-than-expected results and an outlook hinting at more
positive results ahead.
Shares of Intel jumped up more than 7% on Wednesday, with the
shares hitting its highest level in more than nine months.
Bob Manning, director of wealth management at Morgan Stanley
Smith Barney, said Intel's earnings report cannot be
overstated.
"A quarter ago, Intel called a bottom in the semiconductor
portion of the market. And to their credit, they delivered with
earnings. In fact they literally knocked the cover off the ball, a
complete surprise to Wall Street," said Manning.
Intel's results also suggest a rebound in business investment,
Manning said. "When companies are forced to make layoffs, with the
people they have left they have to make those people and that
company much more efficient, and that's when they turn to
technology." Listen to more.
Also Tuesday, Johnson & Johnson reported second-quarter
results, with the health care products company's 3.5% profit drop
beating Wall Street's lowered expectations.
Shares of Johnson & Johnson, like Intel a member of the Dow
industrials, were lately up more than 1%.
"Stocks will continue to move impulsively on earnings," said
Nick Kalivas, an analyst at MF Global Research, who added CSX Corp.
(CSX) to the string of better-than-expected headline earnings
numbers.
CSX, one of the country's biggest railroads, on Monday reported
earnings fell 20% in the second quarter, with the results still
topping Wall Street's expectations. .
"The world changes when you get to earnings, it becomes a
minefield, and more of a stock-specific, sector-specific
environment, rather than people trying to predict where the market
goes," said Peter Boockvar, equity strategist, Miller Tabak &
Co.
