Wall Street bounces back
Major indexes rose more than 2 percent as companies also raised forecasts for coming quarters, reversing some of the negative sentiment surrounding the pace of economic recovery.
Stocks tumbled on Wednesday after Federal Reserve Chairman Ben Bernanke’s comments on the economy triggered a broad selloff. But traders said Bernanke’s tone seemed slightly more positive in testimony on Thursday before a House committee, telling lawmakers the economy is still in a recovery period.
“He seemed calmer today and said we’re on our way to a recovery, and that’s steadied the market along with the earnings reports,” said Carl Birkelbach, chief investment officer of Birkelbach Investment Securities in Chicago. “Yesterday the comments of Bernanke knocked out the market,”
Investors were cheered early after United Parcel Service Inc (UPS.N), the world’s largest package delivery company, raised its outlook, sending its shares up 5.9 percent to $63.52 and sparking a broad rally. The company is viewed as a barometer of economic demand.
“UPS guiding higher is a very good sign since the amount of shipping volume is directly correlated to the strength of the economy,” said Peter Jankovskis, co-chief investment officer of Oakbrook Investments LLC in Lisle, Ill.
The Dow Jones industrial average .DJI was up 215.32 points, or 2.13 percent, at 10,335.85. The Standard & Poor’s 500 Index .SPX was up 24.61 points, or 2.30 percent, at 1,094.20. The Nasdaq Composite Index .IXIC was up 54.34 points, or 2.48 percent, at 2,241.67
Manufacturers Caterpillar Inc (CAT.N) rose 2 percent to $68.24 and 3M Co (MMM.N) rose 3.1 percent to $84.85 after they reported higher-than-expected results.
Advancers outnumbered decliners by almost seven to one on the New York Stock Exchange, and by about four to one on the Nasdaq.
Stocks of homebuilders were also higher despite data showing U.S. existing-home sales fell, although the fall was less than forecast. The report also showed the median home sales price rose by 1 percent.
The PHLX Housing index .HGX rose 3.6 percent. Housing companies KB Home (KBH.N) rose 2.6 percent to $10.93 and Lennar Corp (LEN.N) rose jumped 3.6 percent to $14.83.
August crude futures rose 2.9 percent as the possibility of a tropical storm in the Gulf of Mexico disrupting production increased. The S&P 500 energy sector .GSPE rose 2.6 percent.