NEW YORK (Reuters) - Global shares jumped on Wednesday after stellar earnings from Apple Inc bolstered optimism over corporate earnings and Federal Reserve Chairman Ben Bernanke said the central bank was prepared to do more to aid the U.S. economy if necessary.
The dollar slipped and U.S. stocks extended gains in late trade after Bernanke said the Fed “would not hesitate” to launch another round of bond purchases to drive borrowing costs lower, though he made no suggestion further support was in the works.
Bernanke’s news conference following the Fed’s latest policy meeting capped a see-saw session. Earlier, the Fed reiterated its expectation that interest rates would not rise until late 2014 at the earliest, a statement that briefly drove bond yields up and led gold to sell off before recovering.
The broad S&P 500 rose more than 1 percent and the Nasdaq climbed more than 2 percent in its biggest gain so far this year, lifted by Apple’s results.
The Fed raised its forecasts for economic growth and core inflation, while lowering its expectations for the unemployment rate for 2012. The forecasts countered data earlier in the day on capital goods orders, which pointed to slower growth this quarter.
The euro recouped early losses to trade near session highs, rising 0.2 percent to $1.3223 in late New York trade.
“People looked at the FOMC statement and saw no mention of QE3. But in his press conference, Bernanke made it quite clear that additional asset purchases remain completely on the table. That may have been a revelation to some of the earlier sellers,” said William O’Donnell, head of U.S. Treasury strategy for the Americas at RBS Securities in Stamford, Connecticut.
U.S. equity markets zoomed at the open on Apple’s report that quarterly profit almost doubled from a year earlier after markets closed on Monday.
Shares of Apple (AAPL.O) rose 8.9 percent to $610.00 on a surge that increased its market capitalization by $46.4 billion.
Apple’s forecast-beating results removed a weeks-old market overhang and lifted optimism in a corporate earnings season that is already far outstripping expectations. About 75 percent of the 200 companies in the S&P 500 that have reported results so far have beat expectations, a rate that is above the norm.
The Dow Jones industrial average .DJI closed up 89.16 points, or 0.69 percent, at 13,090.72. The Standard & Poor's 500 Index .SPX climbed 18.72 points, or 1.36 percent, at 1,390.69. The Nasdaq Composite Index .IXIC surged 68.03 points, or 2.30 percent, at 3,029.63.
Investors shrugged off a Commerce Department report that showed durable goods orders for March fell 4.2 percent, the biggest decline in three years and the latest of recent signs of softness in U.S. economic data. <ID:L2E8FP2GL>
“This adds to the evidence that momentum in the economy sort of fell flat in March,” said Ellen Zentner, senior U.S. economist at Nomura Securities in New York.
However, non-defense capital goods shipments excluding aircraft, used to calculate gross domestic product, were much stronger than expected in March, she said.
The 2.6 percent increase is “likely to lift estimates, believe it or not, for first-quarter GDP,” Zentner said. “But... this report implies a fairly weak outlook for business investment.”
MSCI's all-country world equity index .MIWD00000PUS rose 1.0 percent to 326.46, but its emerging markets index .MSCIEF traded near break-even on a slide in Brazilian equities .BVSP. Itau Unibanco Holding (ITUB.N), Brazil's biggest private-sector lender, said it will set aside more money to cover growing past-due loans.
European shares rose for a second day, buoyed by a crop of strong earnings reports. The FTSE Eurofirst .FTEU3 index of top European shares closed up 1 percent at 1,042.55.
U.S. Treasury debt prices fell. The benchmark 10-year U.S. Treasury note was down 4/32 in price to yield 1.99 percent.
Crude oil futures turned higher late in the session, getting a lift from U.S. equities despite pressure from a larger-than-expected increase in U.S. crude inventories and a report that Iran may consider a halt to its nuclear program.
Brent rose 96 cents to settle at $119.00 a barrel. U.S. crude for June delivery settled up 57 cents at $104.12 a barrel.
Gold ended near flat after a volatile session that saw the precious metal tumble $15 an ounce after the Fed ended its two-day policy meeting, then quickly recover those losses.
U.S. gold futures for June delivery settled down $1.50 an ounce at $1,642.30.