Wall Street rises after five losing days, Alcoa soars
NEW YORK (Reuters) - An encouraging start to earnings season helped stocks rebound on Wednesday from five days of losses that pushed the S&P 500 below a key technical level.
Equities cut gains late in the session after the Federal Reserve said rising energy costs were a concern for economic growth. Atlanta Fed President Dennis Lockhart said the economy would have to get a lot worse before the central bank would offer more stimulus.
Sectors linked with economic growth led the way higher as their recently beaten-down prices made them attractive to bargain hunters. The S&P financial sector index rose 1.6 percent. Bank of America gained 3.7 percent to $8.86.
Alcoa Inc rose 6.3 percent to $9.90 a day after the Dow component reported a surprise first-quarter profit, easing concerns about a weak earnings season.
"Expectations have been running very low, so the optimistic start to earnings season is a very welcome sign," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. "That said, we're going to get a broad sense of how industries are faring this week, and we may trade sideways until we get that."
On Tuesday, the S&P 500 closed below its 50-day moving average for the first time since December, and on Wednesday the level provided technical resistance to its rebound. The S&P's 50-day moving average is now near 1,373, close to Wednesday's session high.
Google Inc, JPMorgan Chase & Co and Wells Fargo & Co are among the companies slated to report later this week.
The Dow Jones industrial average rose 89.46 points, or 0.70 percent, to 12,805.39 at the close. The Standard & Poor's 500 Index gained 10.12 points, or 0.74 percent, to 1,368.71. The Nasdaq Composite Index advanced 25.24 points, or 0.84 percent, to 3,016.46.
Tuesday marked the S&P 500's largest daily percentage drop in four months. Investors will assess whether the slide presents a buying opportunity for those who missed the market's gains in the first three months of the year.
The U.S. economy kept growing moderately in the late winter months, although rising gas prices were beginning to worry producers and consumers across the country, the Federal Reserve said in its latest "Beige Book" summary of national activity. This assessment had little impact on equities.
European Central Bank Executive Board member Benoit Coeure, calming fears about the euro zone, said on Wednesday the central bank still had the Securities Market Programme (SMP) in place allowing it to purchase the debt of euro-zone nations, should the need arise.
Glass container maker Owens Illinois surged 6.9 percent to $23.52 a day after the company forecast a 35 percent rise in its first-quarter profit.
In contrast, the U.S.-listed shares of Nokia tumbled 15.7 percent to $4.24 after the mobile phone maker warned its phone business would post losses in the first two quarters this year, as it struggles to revamp its product line.
Bearish analysts see more declines ahead as a result of an overextended market that has lost its footing as the euro zone's debt crisis resurfaces and U.S. economic indicators soften.
Volume was light, with about 6.31 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, below last year's daily average of 7.84 billion.
More than three-fourths of the stocks traded on both the New York Stock Exchange and the Nasdaq closed higher.
(Editing by Jan Paschal)
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