A drop in oil prices and strong earnings at PepsiCo and Cisco Systems propelled stocks higher today, with the Dow Jones industrial average surging more than 100 points.
Reports that Pfizer might sell its consumer products business contributed to the advance.
The Dow rose 108.86, or 1.01%, to close at 10,858.62.
Broader stock indicators were higher. The Standard & Poor’s 500 index rose 10.87, or 0.87%, to 1,265.65, and the Nasdaq composite index rose 22.02, or 0.98%, to 2,266.98.
Wall Street’s major indexes built momentum throughout the afternoon, climbing higher as the close neared. But with investors still concerned about interest rates, analysts viewed the market’s jump with caution.
“The market was a little oversold,” said Russ Koesterich, senior portfolio manager at Barclays Global Investments. “I think this (the run-up) is mostly technical. I don’t think you can read too much into it, since there weren’t a lot of drivers.”
Cisco, which closed up 7.2%, led tech and telecom stocks higher after its earnings exceeded analysts’ expectations. An upgrade of Dell also helped the tech sector.
Investors who had lost patience with drug maker Pfizer applauded news it was considering a sale or spin off of the consumer business, which includes Listerine mouth wash, Visine eye drops and Lubriderm skin lotion. Its stock rose 5.2%.
Sentiment also improved as crude oil prices declined for the second day. Crude oil settled at US$62.55 (€52.31) a barrel, down 54 cents, on the New York Mercantile Exchange. Crude oil fell US$2.02 (€1.69) a barrel on Tuesday.
The indexes moved sharply higher after the S&P 500 pierced 1,260, said Ryan Larson, equity trader at Voyageur Asset Management, a subsidiary of RBC Dain Rauscher. Traders had been seeing 1,260 as a “resistance level” for the index - a price ceiling that has, in past sessions, triggered a sell-off.
“Once the S&P broke through that, it was kind of a herd mentality: One goes, they all go,” Larson said.
Bonds fell, with the yield on the 10-year Treasury note at 4.59%, up from 4.57% on Tuesday. The US dollar rose against other major currencies. Gold prices declined, after hitting a 25-year high earlier this month.
In company news, networking gear provider Cisco rose 1.31 to 19.40 after its fiscal second-quarter earnings, excluding one-time items, beat analysts’ expectations. In its earnings report, which followed the close of trading on Tuesday, the company said its profits dropped, hampered by stock-option expenses, but sales rose on strong business orders.
Technology stocks were also helped by Sanford Bernstein’s upgrade of Dell to “outperform” from “market perform.” Sanford Bernstein analyst Toni Sacconaghi said the computer company’s business model “remains intact.” Dell rose 1.83, or 6.2%, to 31.52.
PepsiCo, the world’s second-largest soft-drink maker after Coca-Cola, rose 42 cents to 57.28 after it reported fourth-quarter earnings up 13%. The company benefited from an extra selling week in the quarter and sales growth across its Frito-Lay, Quaker Foods and beverage operations.
Dow component Pfizer rose 1.43 to 26.37.
Advancing issues led decliners by roughly 10 to 7 on the New York Stock Exchange, where volume was 1.79bn shares, up from 1.78bn at the same time on Tuesday.
The Russell 2000 index of smaller companies rose 3.98, or 0.55%, to 721.16.
In other markets, Japan’s Nikkei stock average fell 2.68%, the FTSE 100 lost 0.38%, Germany’s DAX index slid 0.11%, and France’s CAC-40 fell 0.82%.