Dow soars after positive economic assessment
Stocks soared on Wall Street today, with the Dow Jones industrials gaining 128 points as a sharp drop in oil prices and a reassuring assessment of the US economy helped investors overcome their disappointment over Intel’s earnings and troubling sales forecasts.
Intel’s profits and a warning of slow fourth-quarter sales rattled investors who had hoped for more bullish forecasts from corporate America.
But the market drew solace from the Federal Reserve, which in its regular “Beige Book” breakdown of the economy said many parts of the US are still seeing decent growth despite high energy prices.
Stocks were also boosted by falling crude oil futures after the Energy Department reported larger-than-expected inventories of oil, petrol and heating oil. A barrel of light crude was quoted at US$62.41 (€52.02), down 79 cents, on the New York Mercantile Exchange.
Yet earnings, and the Fed report, were measures of the economy’s status weeks and months ago. The market is still nervous about rising inflation and consumer spending for the fourth quarter and beyond – leading analysts to wonder whether today’s rally can be sustained.
“There are some signs on the wall here that we may have hit the bottom of this market, and we could be ready to move up,” said Chris Johnson, manager of quantitative analysis at Schaeffer’s Investment Research in Cincinnati. “The big question, though, is how far we move up and how long it lasts.”
The Dow Jones industrial average rose 128.87, or 1.25%, to 10,414.13.
Broader stock indicators also moved higher. The Standard & Poor’s 500 index climbed 17.61, or 1.49%, to 1,195.75, while the tech-focused Nasdaq composite index added 35.24, or 1.71%, to 2,091.24.
