Wall Street regained its upward momentum today after encouraging outlooks from companies such as Intel and Nvidia motivated investors to buy after two days of declines. The Dow Jones industrials climbed 113 points.
Analysts said the confident news cheered investors worried about a stumbling economy in the later part of the year and gave the Nasdaq composite and Standard & Poor’s 500 index their fourth straight winning week.
“When you have industry leaders saying they think there will be a slight recovery in the PC market, there’s a whole domino effect with software companies and chip companies doing better,” said Tim Smalls, managing director at SG Cowen Securities.
“That’s the area where you have to get the market moving – through capital expenditures on the corporate side,” he added. “Unless we get that, we’ll drift lower.”
The Dow closed up 113.38, or 1.3%, at 8,604.60, more than erasing a two-day loss of 97 points. It was the highest level seen since January 16 when the blue chips finished at 8,697.87.
The broader market also finished higher. The Nasdaq gained 30.46, or 2%, to 1,520.15. The S&P rose 13.14, or 1.4%, to 933.41.
For the week, the three main gauges finished higher, with the Dow up 0.3%, the Nasdaq higher 1.2%, and S&P up 0.4%. The Dow posted its second straight winning week.
Dow component Intel rose 71 cents to 19.58 dollars after the technology giant said it saw signs of an industry turnaround later this year, citing growth in the key China market.
Nvidia surged 5.31 dollars, or 33.1%, to 21.37 dollars after the chipmaker reported quarterly earnings that beat estimates by a penny a share it also gave an encouraging outlook for the next quarter.
“It’s a continuation of a market looking ahead rather than looking behind,” said Scott Wren, equity strategist for A.G. Edwards & Sons. “We’re going to see mixed news as we work our way out of things, but I think it will continue to be more positive than negative.”
Stocks have rallied in recent weeks on upbeat first-quarter profits, but investors are now looking for more solid evidence the economy will rebound later this year. A lack of such evidence led to bouts of profit-taking in recent days on mixed economic data.
Coca-Cola, another Dow component, rose 1.11 dollars to 44.99 dollars after a Bear Stearns analyst upgraded the soft drink giant’s stock rating to “outperform”, citing in part improvements from operations.
Gateway advanced 25 cents to 3.24 dollars after the computer company said it would introduce a wide range of offerings in the coming year to boost profitability.
Advancing issues outnumbered decliners 5 to 2 on the New York Stock Exchange. Volume was moderate.
The Russell 2000 index, a barometer of smaller company stocks, rose 5.85, or 1.4%, to 413.53.