NEW YORK (Reuters) - Stocks jumped on Wednesday, rebounding from a two-month low, after a surprisingly healthy earnings report from IBM fueled optimism that technology may fare better than other sectors during the recession.
Financial stocks outperformed as well on the strength of earnings surprises from Northern Trust NTRS.O and PNC Financial Services PNC.N, helping the group reclaim some of Tuesday's massive losses that dropped the financial sector to a 14-year low.
Technology shares may get a boost for a second straight session after Apple AAPL.O reported quarterly profit that beat Wall Street estimates after the bell and gave an outlook for its second quarter. Apple's stock rose 10 percent to $90.85 in extended trade, helping to lift stock futures.
Intel INTC.O shares rose 1 percent to $13.40 in extended trade after the chip maker said that it would close sites in Asia and scale back operations in the United States in a restructuring that could affect up to 6,000 jobs.
During the regular session, the market shrugged off a brief sell-off after Treasury Secretary nominee Timothy Geithner faced tough questioning at his confirmation hearing before a Senate committee.
The day after earnings results from State Street alarmed investors about losses in one of the safest parts of banking, earnings from rival Northern Trust Corp NTRS.O on Wednesday soothed investor concerns after its net income more than doubled. The financial services company's shares shot up nearly 31 percent to $57.51.
PNC Financial Services Group Inc PNC.N also projected lower loan losses from its purchase of National City Corp, sending its shares soaring 37 percent to $30.16.
“People are excited because financials are valued so low at this point. It’s the mentality that they can’t get any lower, but they’ve proven time and time again that they can,” said Jocelynn Drake, market analyst at Schaeffer’s Investment Research in Cincinnati, Ohio.
The Dow Jones industrial average .DJI gained 279.01 points, or 3.51 percent, to 8,228.10. The Standard & Poor's 500 Index .SPX rose 35.02 points, or 4.35 percent, to 840.24. The Nasdaq Composite Index .IXIC climbed 66.21 points, or 4.60 percent, to 1,507.07.
The rise marked the Dow’s largest point and percentage gain since December 16, 2008, but the index remains down 6.3 percent month-to-date.
IBM AND JPMORGAN BOOST THE DOW
International Business Machines Corp IBM.N provided the biggest lift to the Dow, jumping nearly 12 percent to $91.42 after the world's top technology services company posted a quarterly profit and a 2009 profit outlook that surpassed Wall Street's expectations. That burst of strength from IBM led
investors to believe the Dow component can weather the global economic downturn.
Apple led the Nasdaq higher, ahead of its quarterly earnings report after the closing bell, and in spite of a report that U.S. regulators were examining the company’s disclosures about CEO Steve Jobs’ health. Apple’s stock closed on Nasdaq at $82.83, up 5.9 percent.
Hearings on Geithner’s appointment attracted the market’s attention for much of the day as he is seen as President Barack Obama’s point man in battling the economic crisis. As the president of the Federal Reserve Bank of New York since 2003, Geithner is expected to hit the ground running if confirmed as Treasury secretary. The Senate Finance Committee is scheduled to vote on Geithner’s nomination on Thursday.
A day after his historic inauguration, Obama met with his economic advisers, who are working with the Democratic-led Congress on an $825 billion fiscal stimulus package.
The financial sector drove gains in the S&P 500 following Tuesday’s sharp sell-off, which was ignited by deepening fears of insolvency among banks.
Bank of America BAC.N shares climbed 31 percent to $6.68 after Chief Executive Kenneth Lewis purchased 200,000 common shares, four days after the company posted its largest quarterly loss in 17 years.
JPMorgan Chase JPM.N ranked as the Dow's second-biggest advancer, surging 25.1 percent to $22.63.
SINGING THE eBAY BLUES
On the downside, Wal-Mart Stores Inc WMT.N was the heaviest weight on the Dow after being downgraded to a "neutral" rating by Credit Suisse. Shares of Wal-Mart, the world's largest retailer and leading discount chain, slid 2.8 percent to $49.14.
After the bell, shares of eBay EBAY.O slid nearly 7 percent in extended trade to $12.36 after the online auctioneer posted a lower fourth-quarter profit and gave a disappointing outlook for its current quarter as consumer spending declines. In regular trading, before the earnings release after hours, eBay's stock gained almost 6 percent to close at $13.28 on Nasdaq.
Trading volume was active on the New York Stock Exchange, with about 1.74 billion shares changing hands, above last year’s estimated daily average of roughly 1.49 billion, while on Nasdaq, about 2.14 billion shares traded, below last year’s daily average of 2.28 billion.
Advancing stocks outnumbered declining ones on the NYSE by a ratio of 4 to 1, while on the Nasdaq, about three stocks rose for every one that fell.
Editing by Jan Paschal
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