Yahoo! results spark rally

EARNINGS which were stronger-than-expected from internet bellwether Yahoo! and a recovery in some recently hard-hit blue-chip issues combined to boost US stocks at midday yesterday, one session after stocks hit new multi-year lows.

Around 11.45 am. ET, the Dow Jones industrial average, up 111.94 to 7398.21, Standard & Poor's 500 index up 13.87 to 790.63 and the Nasdaq composite up 30.54 to 1144.65, all rallied after testing both sides of unchanged.

“The internals yesterday were so terrible, we were due for a bounce, for a short-covering rally to alleviate the bearish trend,” said Donald Selkin, director of research at Joseph Stevens. “And the news today is good. With all the gloom and doom about earnings, some companies are actually saying something good, like Yahoo! and Aetna. And the weekly jobless claims number was better.

“We were so oversold and there's been this lack of liquidity, so when the buying kicks in, it really takes off, which is what we're seeing today,” Selkin added. “This is a capitulation level for now. But is it the start of something new? I don't know.”