Dow Jones extends rise past 11,000 on rising hopes for Intel’s resultsBy Tim Paradis, AP
Tuesday, April 13, 2010
Stocks end higher on hopes for good Intel results
NEW YORK — The Dow Jones industrial average extended its push past 11,000 Tuesday after expectations grew that stronger corporate earnings would signal that a recovery is on track.
Stocks fell in early trading after quarterly results from aluminum producer Alcoa Inc. missed expectations. Major indexes later poked higher as traders jockeyed for position ahead of earnings from leading chipmaker Intel Corp., which reported strong results after the closing bell.
By the close, the Dow had tacked on about 13 points. The Dow on Monday finished above the psychological benchmark of 11,000 for the first time in a year and a half.
The results from Alcoa brought a disappointing start to the flow of earnings reports from the January-March quarter. But analysts said the company’s performance didn’t provide a good indication of how other companies would do.
Alcoa’s loss narrowed from a year earlier but its adjusted earnings and revenue came in below analysts’ estimates. Alcoa was the first of the 30 Dow stocks to report results.
The mood could brighten Wednesday following Intel’s report. The company said its first-quarter profit nearly quadrupled from a year earlier when it booked a big loss on an investment. The company’s earnings and revenue came in ahead of analysts’ expectations and brought more evidence that businesses are again spending on technology after a drop during the financial crisis. Intel’s shares rose more than 3 percent in electronic trading after hours.
Nasdaq 100 index futures rose 0.4 percent following Intel’s report.
Jim McDonald, chief investment strategist at Northern Trust in Chicago, said earnings reports are likely to top expectations because few companies have warned their results will miss forecasts.
“If we continue with this pace, at the end of the second quarter we will be at a new all-time high for earnings for the U.S. economy,” he said. “That’s a pretty stunning achievement.”
The stock market has been rising for 13 months on signs that the economy is improving. But some analysts are concerned that the rise has come too quickly.
Since major stock indexes hit 12-year lows last year, there have been five pullbacks of as much as 8 percent in the Standard & Poor’s 500 index. None have topped the 10 percent mark that would signify a correction.
There have been few drops in the past two months. Instead, stocks have been notching a string of steady gains.
“The market has ground higher steadily,” said Adrian Cronje, chief investment officer at the investment firm Balentine in Atlanta. “It’s up a little bit every day, a little bit every day. And that tends to lull people into complacency.”
The Dow rose 13.45, or 0.1 percent, to 11,019.42, its highest close since September 2008. The Dow has risen four straight days and is up 10 of the last 13 days.
The S&P 500 index rose 0.82, or 0.1 percent, to 1,197.30, while the Nasdaq composite index rose 8.12, or 0.3 percent, to 2,465.99.
Advancing stocks narrowly outpaced those that fell on the New York Stock Exchange, where consolidatd volume came to 5.4 billion shares, compared with 4.6 billion Monday.
Bond prices were mixed. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.82 percent from 3.85 percent late Monday.
The dollar slipped against other major currencies. Gold fell.
Oil dropped for a fifth day after Alcoa’s results lowered expectations about the pace of a rebound. Light, sweet crude fell 33 cents to $84.01 per barrel on the New York Mercantile Exchange.
The Chicago Board Options Exchange’s Volatility Index, which is known as the market’s fear gauge, rose 4 percent a day after closing at its lowest level since July 2007. That means fewer investors are predicting big swings in the market.
Max Bublitz, chief strategist at SCM Advisors in San Francisco, is among the traders who remain cautious because of how high stocks have risen. He said that the drop in the VIX is a sign that too many investors are predicting that the smooth ride higher will continue.
“It is interesting that people have kind of forgotten all the pain and forgotten all the lessons,” he said, referring to the stock market’s plunge during the recession.
The S&P 500 index has jumped 77 percent since March last year but it would have to climb another 24 percent to reach its peak of 1,565 in October 2007.
Among stocks in the news, Alcoa fell 23 cents to $14.34. Intel rose 23 cents to $22.77 ahead of its report. In after-hours trading, the stock advanced 81 cents, or 3.6 percent, to $23.58.
The Russell 2000 index of smaller companies rose 1.97, or 0.3 percent, to 707.03.
Britain’s FTSE 100 fell 0.3 percent, Germany’s DAX index fell 0.3 percent, and France’s CAC-40 fell 0.5 percent. Japan’s Nikkei stock average fell 0.8 percent.