Buyers jump in on rally

A POWERFUL stock market rally held its own yesterday afternoon, with buyers jumping in on a strong profit report from General Electric and a brokerage’s support of IBM, pushing stocks toward their first up week in seven.

Around 3.00pm ET, the Nasdaq composite (up 39.53 to 1202.90, Charts), the Dow Jones industrial average (up 264.94 to 7798.89, Charts) and the Standard & Poor’s 500 index (up 27.38 to 831.30, Charts) all gained about four percent, on the heels of a strong rally on Thursday.

“Market psychology is playing a big role in this,” said Charles Payne, CEO and chief analyst at Wall Street Strategies. “The worst-case scenario has already been baked into markets over the last six weeks, so if big companies like GE today and possibly IBM next week can meet their estimates, that tells us that, sure, things aren’t great, but they’re not that bad either.”

General Electric (GE: up $1.39 to $23.99, Research, Estimates), a Dow component, reported third-quarter earnings per share of 41 cents, in line with estimates, and better than the 33 cents it earned one year earlier. Looking forward, the company also said it will meet current full-year profit estimates.

Market participants jumped on the news, as it seemed to silence the din of doubting brokerages -- such as Morgan Stanley and Merrill Lynch -- who had slashed estimates and ratings on the conglomerate earlier in the week, creating panic that one of America's biggest and most influential companies was having serious profit concerns.