Stocks Rally on Upbeat Earnings, Solid Data
The Dow Jones Industrial Average ($INDU) rose 170 points, or 1.7%, to close at 10,269, while the broader S&P 500 ($INX) added 19 points, or 1.8%, to 1,095. The tech-heavy Nasdaq Composite ($COMPX) Nasdaq added 31 points, or 1.4%, to finish at 2,214.The buying wave started overseas, as a better-than-expected reading on Japan's gross domestic product boosted shares in Asia. Stocks in Europe were higher for the sixth day out of seven after British banking giant Barclays (BCS) posted earnings that topped analysts' estimates.
The euro gained as worries eased for now that the Greek debt crisis would spread, hurting the dollar. The U.S. Dollar Index, which measures the greenback against a trade-weighted basket of six major currencies, fell sharply.
That set the stage for U.S. equity gains, and for the most part the releases and reports didn't disappoint. Dow component Kraft (KFT) beat Street estimates as fourth-quarter profit more than tripled to $710 million, or 48 cents per share. Analysts polled by Thomson Reuters expected earnings of 45 cents per share. Sales, however, which rose 3.2% to $11 billion due to currency conversions, missed Wall Street's expectations of $11.07 billion.
Meanwhile, Dow component Merck (MRK) matched the Street's profit view and exceeded it sales outlook, thanks to the acquisition of Schering-Plough. The now-second-largest pharmaceutical company said net income nearly quadrupled as sales jumped 67%, fueled mostly by the addition of Schering-Plough products but also by higher sales for some key Merck products.
Also lifting stocks were better-than-expected earnings from Abercrombie & Fitch (ANF) and Simon Property Group's (SPG) $10 billion offer for rival General Growth Properties (GGWPQ).
On the data front, the Empire State Manufacturing Index, a key reading on factory activity, unexpectedly soared 9 points to 24.9 in February, its highest level since October, the New York Federal Reserve announced Tuesday. Readings above zero indicate manufacturing activity is growing; below zero, contracting.
Bulls also grabbed on to more encouraging news on the housing front, as the National Association of Home Builders Housing Market Index, boosted by the federal homebuyer tax credit, unexpectedly rose to 17 in February from 15 in January -- the first gain in five months for the index.