Earnings of three bellwethers push stocks higher

Updated 3m ago
By Stephen Bernard, AP Business Writer

NEW YORK — Better than expected earnings reports from three corporate bellwethers helped push stocks to their fourth day of gains on Wednesday, even though the companies themselves didn't get to enjoy the rally.

Intel Corp. and JP Morgan Chase & Co. both fell despite announcing double-digit gains in profits. Their earnings reports, however, contained nuggets of hopeful news on the direction of the broader economy.

JPMorgan's CEO Jamie Dimon predicted credit card defaults are likely to fall next quarter, which helped push shares of American Express up 1.9% and MasterCard up 3.9%. Intel predicted sales should remain consistent through the end of the year as customers switch from back-to-school shopping to the holiday season, which contributed to gains in Dell, which was up 1.5% for the day, and Microsoft, which was up 2%. CSX Corp, one of the largest U.S. railroad companies, saw a big jump in the shipment of cars and trucks.

Intel predicted sales should remain consistent through the end of the year as customers switch from back-to-school shopping to the holiday season. CSX saw a big jump in shipments of cars and trucks.

"They were assuring," said Andrew Ross, partner at First New York Securities. "But they weren't inspiring, or disrupting."


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The Dow Jones industrial average rose 75.68, or 0.69%, to 11,096.08. The Standard & Poor's 500 index rose 8.33, or 0.71%, to 1,178.10. The Nasaq composite index rose 23.31, or 0.96%, 2,441.23.

One reason that the shares in the companies that announced earnings didn't jump was that some traders were expecting even higher gains. "With Intel especially, there were whisper expectations that were much higher than what the analysts had printed, and that helped push the stock up beyond estimates," said Jay Leupp, the president of Grubb & Ellis AGA mutual funds.

Those results allowed the market to continue the upward trajectory it has taken in recent weeks, Ross said. The Dow is up 3.9% in October and has jumped more than 11% since the beginning of September.

Commodities also jumped sharply. Gold touched another record and oil rose about 2%. Freeport-McMoRan Copper & Gold Inc. and Newmont Mining Corp. were among the biggest winners.

Gold rose as high as $1,375.70 an ounce before pulling back to $1,369.80. Benchmark crude oil rose $1.53 to $83.98 a barrel on the New York Mercantile Exchange.

"In an improving (global) economy, everyone is going to consume more," said Christian Wagner, CEO of Longview Capital Management. "You need the basic materials."

Wagner said growth should remain strong in emerging markets helping keep demand high for commodities like aluminum and other metals.

Those results allowed the market to continue the upward trajectory it has taken in recent weeks, Ross said. The Dow is up 3.1% in October and has jumped more than 11% since the beginning of September.

Freeport-McMoRan rose $3.95, or 4.15%, to $99.08, while Newmont jumped $1.18 to $63.18.

CSX shares jumped $2.40, or 4.2%, to $59.66.

JPMorgan Chase shares fell 56 cents to $39.84 and Intel slipped 53 cents to $19.24. Both rose earlier in the day.

With traders moving into stocks, bond prices dipped and interest rates rose slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.48% from 2.43% late Tuesday.

Bond prices rose and interest rates rose slightly. The yield on the benchmark 10-year Treasury note, which moves opposite its price, rose to 2.42% from 2.43% late Tuesday.

Bond prices have been rising in recent weeks as expectations mount that the Federal Reserve will start buying Treasurys and take other measures to encourage lending. Minutes from the Fed's September meeting released Tuesday afternoon suggest that the central bank is nearing consensus on when and how to take more stimulus measures. Traders are hoping for more specific news after the Fed's meeting in early November.

In an odd twist, stocks have also benefited from the expected move by the Fed because they become more attractive investments over a longer period if bond yields continue to fall.

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