Draghi-sparked rally helps S&P break losing streak
NEW YORK (Reuters) - Stocks rode a wave of hope inspired by comments from European Central Bank President Mario Draghi on Thursday, ignoring mixed corporate results to focus on the strongest signal yet of the ECB's intentions to protect the euro zone.
Europe's debt woes have taken a toll on stocks at times during the past two years and more recently have manifested themselves in lackluster corporate results. The most recent disappointments came from United Technologies (UTX.N) and Dow Chemical, which blamed overseas demand for weak results.
Draghi hinted the ECB would target high sovereign bond yields, a measure the ECB has been reluctant to take in the past. Policymakers have made similar statements about saving the euro before, but if these remarks result in decisive action in European bond markets, it could spur a sizable rally in stocks.
"It's certainly a vote of confidence," said Kathy Karlic, chief client officer at Wilmington Trust Investment Advisors in Buffalo, New York, which has $20 billion in assets under management.
"The wall of worry for the euro zone has always been there, but another round of liquidity is very positive."
Shares in sectors more sensitive to risks in Europe and economic demand, such as energy-related stocks and industrials, were among the day's best performers, with the S&P 500 energy index .GSPE up 2.7 percent.
Worries about Europe have also pressured earnings forecasts, with third-quarter S&P 500 earnings now seen falling for a year-over-year decline.
Diversified manufacturer 3M (MMM.N), whose stock rose 2.1 percent to $90.59 after its results beat estimates, helped boost the Dow and was among the brighter spots of the earnings season.
Zynga (ZNGA.O) shares ended down 37.5 percent at $3.17 after hitting an all-time low, a day after the company slashed its profit outlook after fading enthusiasm for its games on Facebook.
After the closing bell, shares of Facebook (FB.O) tumbled 11 percent to $23.87 after reporting its first quarterly results since Facebook's market debut. During the regular sessions its shares lost 8.5 percent.
Amazon.com (AMZN.O) shares were down 0.5 percent at $218.88 after the close following the release of its results. The online retailer forecast third-quarter revenue that lagged Wall Street's projections.
During the regular session, shares of Sprint Nextel Corp (S.N) jumped 20.2 percent to $4.05 after the company posted earnings.
Sales performance this reporting period has lagged earnings. With results in from about half of the S&P 500 companies, 65 percent have beaten analyst earnings estimates but just 41 percent have beaten on revenue, Thomson Reuters data showed.
The Dow Jones industrial average .DJI was up 211.88 points, or 1.67 percent, at 12,887.93. The Standard & Poor's 500 Index .SPX was up 22.13 points, or 1.65 percent, at 1,360.02. The Nasdaq Composite Index .IXIC was up 39.01 points, or 1.37 percent, at 2,893.25.
Shares of United Technologies ended up 0.4 percent at $72.93 while shares of Dow Chemical dropped 3.6 percent to $29.18.
The S&P 500 ended above the technically important 1,333 level, and a sustained move above that level is seen as bullish. The level marks a convergence of several technical factors, including the index's 50-day moving average, and has served as support for stocks.
In economic news, the number of Americans filing new claims for jobless benefits fell last week near a four-year low, although the figures have been volatile due to summer factory shutdowns. Durable goods orders for June were better than expected, but a slip in pending home sales underscored the fragility of the economy.
Volume was 7.44 billion shares on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.74 billion shares.
Advancers beat decliners on the NYSE by about 11 to 4 and on the Nasdaq by about 2 to 1.
(Editing by Kenneth Barry)
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