Stock futures up sharply after solid profit reports from Intel, JPMorgan, retail sales data

Stock futures surge on Intel, JPMorgan reports

NEW YORK — U.S. stock futures surged Wednesday after surprisingly strong earnings reports from Intel Corp. and JPMorgan Chase & Co.

A smaller-than-expected decline in retail sales underpinned the market’s early gains.

Most overseas markets also rose sharply, buoyed by news that the decline in China’s exports slowed in September. The dollar slumped to a fresh 14-month low against other major currencies, sending gold to a new record high of $1,072 an ounce and oil prices above $75 a barrel for the first time in a year.

Treasury prices fell as investors abandoned safe-haven assets for stocks and commodities.

JPMorgan Chase, the first major bank to report third-quarter earnings, stoked the market’s optimism Wednesday as it handily beat Wall Street’s expectations, reporting a profit of $3.59 billion for the July-September period. However, the bank said loan losses are still high and are likely to remain elevated for some time.

Intel also beat analysts’ estimates, reporting a smaller-than-expected decline in profit and sales after the market closed Tuesday. The chip maker said it expects sales in the final period of the year to top analyst projections.

Meanwhile, the Commerce Department said retail sales declined 1.5 percent in September as car sales tumbled following the end of the government’s Cash for Clunkers incentive program. Though it was the largest decline this year, it was not as big as the 2.1 percent drop analysts expected. Excluding autos, retail sales rose 0.5 percent, better than the 0.2 percent increase analysts forecast.

Ahead of the market’s open, Dow Jones industrial average futures rose 109, or 1.1 percent, to 9,918. Standard & Poor’s 500 index futures rose 14.90, or 1.4 percent, to 1,083.70, while Nasdaq 100 index futures rose 24.75, or 1.4 percent, to 1,751.50.

The big gains in stock futures followed the market’s modest losses on Tuesday, sparked by a disappointing decline in sales at Johnson & Johnson that fanned fears that consumers and businesses are still curbing their spending. Adding to the day’s woes was a downbeat report from an influential banking analyst suggesting bank stocks are overvalued. The reports from Intel and JPMorgan eased some of those concerns.

JPMorgan shares soared $1.62, or 3.5 percent, to $47.28 in premarket trading. Intel shares gained 88 cents, or 4.3 percent, to $21.37.

In Asia, China’s Shanghai index rose 1.2 percent, while Hong Kong’s Hang Seng index jumped 2 percent. Japan’s Nikkei index slipped 0.2 percent. In afternoon trading, Britain’s FTSE 100 gained 1.9 percent, Germany’s DAX index jumped 2.3 percent, and France’s CAC-40 rallied 2.0 percent.

The ICE Futures U.S. dollar index, which tracks the dollar against other major currencies, fell 0.5 percent, after earlier hitting its lowest point since August 2008.

Oil prices rose as high as $75.15 and recently traded up 78 cents at $74.93 a barrel in electronic trading on the New York Mercantile Exchange. Gold prices retreated slightly after touching a fresh record high.

Bond prices tumbled as stock futures soared. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 3.41 percent from 3.35 percent late Tuesday.

In other earnings news, the drugmaker Abbott Laboratories beat Wall Street’s profit expectations and raised its projections for the year above current estimates.

Third-quarter earnings, and more specifically, the reports from major banks, are the market’s key focus this week. Goldman Sachs Group Inc. and Citigroup Inc. will issue results on Thursday, followed by Bank of America Corp. on Friday.

Better-than-expected quarterly reports from banks have been the key driver of the market’s seven-month-long rally, and financial stocks have been some of the biggest beneficiaries of that rally.

The benchmark Standard & Poor’s 500 index is up 58.6 percent since hitting a 12-year low in early March. The KBW Bank Index, which tracks 24 of the largest U.S. banks, has risen a massive 143.3 percent since then.

With bank stocks having run up so much over the past several months, investors are worried that current valuations may exceed companies’ earnings potential. Investors want to see signs that loan losses are stabilizing and that banks have been able to build up solid core businesses.

Still, investors didn’t seem fazed that JPMorgan, considered one of the strongest financial institutions throughout the financial crisis, doubled the amount of money it set aside during the quarter to cover failed home and credit card loans.

Instead, they seemed to be encouraged by the fact that divisions like retail and investment banking helped the bank earn a hefty profit.

“I think what JPMorgan has shown is that big banks still have earnings power,” said Tyler Hall, an analyst at SNL Financial.

Analysts say companies’ earnings reports, which will continue to pour in over the next few weeks, are the key to keeping the market’s rally alive. If reports largely fall short of expectations, the stock market’s advance could stall.