US stocks soar

Confident US investors, buoyed by positive earnings reports from the financial sector and bullish corporate outlooks for 2005, returned to the market today after weeks of uncertainty, pushing stocks sharply higher.

With hundreds of companies reporting earnings this week and next, investors were cheered by results from Bank of America, Wells Fargo & Co. and others, even as earnings from Dow component 3M disappointed Wall Street.

This week’s earnings reports will give Wall Street a much clearer picture of the US economy, analysts said, and could draw even more investors back into the market if earnings reports and forecasts for the year ahead remain strong.

“I think there’s a bias toward optimism on the part of investors, but mostly it’s just wait and see,” said Hugh Johnson, chief investment officer at First Albany Corp. “We’ve had good earnings, but it’s only this week that we’ll be getting into the real heart of earnings season.”

The Dow Jones industrial average rose 70.79, or 0.67%, to 10,628.79.

Broader stock indicators moved substantially higher. The Standard & Poor’s 500 index was up 11.46, or 0.97%, at 1,195.98, and the Nasdaq composite index gained 18.13, or 0.87%, to close at 2,106.04.

It was the first time in 2005 that the Dow, S&P and Nasdaq enjoyed back-to-back gains, having risen in Friday’s session. The markets were closed yesterday for Martin Luther King Day.

A dip in crude futures also helped the buying after the major indexes start the session lower.

Oil prices topped US$49 (€37.65)per barrel in early trading, but slumped considerably by midday and fell below US$48 (€36.89) by the afternoon. A barrel of light crude settled at US$48.38 (€37.17), unchanged from the previous session, on the New York Mercantile Exchange.

“I think you saw a handful of investors deciding that the S&P, in particular, had gone down far enough and decided to place some big bets, and that started us off toward positive territory,” said Brian Williamson, an equity trader at The Boston Company Asset Management. “And that move, with earnings going well and oil prices falling, kind of cascaded to the point we’re at now.”

The strong earnings reports from the financial sector led to optimism that the Federal Reserve – seeing confidence in corporate America and some strength in the dollar over the past week – would not abandon its gradual pace in raising interest rates.

Bank of America rose 84 cents to 45.73 after posting earnings of 94 cents per share, on par with analysts’ expectations. The company said its integration of FleetBoston, which it purchased last year, remained on track.

Wells Fargo saw its profits rise 10% from a year ago, with revenues outstripping Wall Street’s projections. However, its quarterly profit missed estimates by 2 cents per share. Wells Fargo climbed 77 cents to 61.46.

Ameritrade Holding surpassed profit forecasts by 3 cents per share in its latest quarter, buoyed by strong client balances and a positive interest rate environment. The online brokerage also increased its 2005 profit estimates.

Ameritrade gained 42 to 12.85.

Industrial conglomerate 3M saw its earnings grow 16.3% in the fourth quarter, and its quarterly profits fell in line with Wall Street forecasts. The company also projected moderate profit growth in 2005. 3M dropped 1.95 to 82.02.

Drug maker Abbott Laboratories lost 21 cents at 46.04 after matching Wall Street’s estimates. The company also reiterated its 2005 outlook, expecting sales growth of 10% to 12%.

Advancing issues outnumbered decliners by nearly 9 to 5 on the New York Stock Exchange, where volume was moderate.

The Russell 2000 index of smaller companies was up 7.39, or 1.2 %, at 624.87.