Stocks soar after solid profits from Intel and JPMorgan; Dow approaches 10,000

Stocks surge on strong earns from Intel, JPMorgan

NEW YORK — Surprisingly strong earnings reports from Intel Corp. and JPMorgan Chase & Co. are sending stocks sharply higher.

The Dow Jones industrial average was just 15 points away from the 10,000 mark in early afternoon trading Wednesday, a level not seen in a year. Major stock indexes all rose more than 1 percent.

JPMorgan Chase, the first major bank to report third-quarter earnings, stoked the market’s optimism as it handily beat Wall Street’s expectations, reporting a profit of $3.59 billion for the July-September period. The bank also achieved record year-to-date revenue.

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.

“Better than expected is a win,” said Peter Schwartz, principal at Gregory J. Schwartz & Co. “People’s expectations have been calibrated to buffer some of the bad news.”

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

Together, the reports quieted fears that major U.S. companies won’t be able to boost profits through sales growth and not just massive cost-cutting, which was a main driver behind the improvement in second-quarter results.

A smaller-than-expected decline in retail sales last month also encouraged buyers, as did another rally in commodities prices. Gold hit a new record of $1,072 an ounce, while oil rose above $75 a barrel for the first time in a year. Treasury prices and the dollar fell as investors abandoned safe-haven assets.

The Dow rose 110.41, or 1.1 percent, to 9,981.47. The Standard & Poor’s 500 index rose 12.93, or 1.2 percent, to 1,086.12, and the Nasdaq composite index rose 24.01, or 1.1 percent, to 2,163.90.

About three stocks rose for every one that fell on the New York Stock Exchange, where 328 stocks hit new 52-week highs and only two hit new lows. Volume on the NYSE came to 528.5 million shares, compared with 462.1 million at the same time on Tuesday.

The market’s gains followed 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.

The strong results from JPMorgan helped alleviate worries about banks prompted the day before when a prominent analyst downgraded Goldman Sachs Group Inc. JPMorgan shares soared $1.50, or 3.3 percent, to $47.16, its highest level in a year. Intel shares gained 54 cents, or 2.6 percent, to $21.03.

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 jumped 78 cents to $74.93 a barrel on the New York Mercantile Exchange, after earlier rising as high as $75.40.

Bond prices fell as stocks soared. The yield on the 10-year Treasury note rose to 3.40 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. Shares rose $1.70, or 3.4 percent, to $51.35.

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

Stronger bank earnings were a big factor behind the huge stock rally this spring and summer, which pushed the Standard & Poor’s 500 index 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 stocks having run up so much, investors have long been bracing for a significant pullback. But any retreats in stocks have been modest — less than 10 percent — and brief. The market continues to feed on its own momentum.

“I think what’s happened is you had all these people sitting on the sidelines waiting for the correction to come,” said Peter Schwartz, principal at Gregory J. Schwartz & Co. “But as time goes by and we haven’t had any major pullbacks, these people sitting on the sidelines are finally pulling th trigger saying, ‘I can’t wait any longer.’ “

Many analysts say the market’s momentum could build if the Dow crosses the psychologically important level of 10,000.

The Dow first finished above 10,000 on March 29, 1999, in the midst of a powerful rally that ended with the dot-com bust at the start of this decade. Stocks then fell below that mark last October as investors sold stocks in a feverish panic following the downfall of Lehman Brothers.

At the 10,000 level, the Dow would still be 29 percent below its peak of 14,164.53 hit in October 2007.

The latest round of earnings reports, which will continue to pour in over the next few weeks, are the key to keeping the market’s rally alive, analysts say. If earnings fall short of expectations, stocks could stumble.

Among the day’s economic news, the Commerce Department said retail sales declined 1.5 percent last month as car sales tumbled following the end of the government’s Cash for Clunkers program. While that was the largest monthly decline this year, it was not nearly as big as the 2.1 percent drop analysts had expected.

The Russell 2000 index of smaller companies rose 7.69, or 1.3 percent, to 619.39.

Overseas mainly rose, buoyed by news that the decline in China’s exports slowed in September. 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.

Britain’s FTSE 100 gained 2.0 percent, Germany’s DAX index jumped 2.5 percent, and France’s CAC-40 rallied 2.1 percent.