NEW YORK (Reuters) – Stocks bounced back on Wednesday on strong corporate earnings and raised outlooks, while a decline in the U.S. dollar lifted shares related to materials companies.
Delta Air Lines (DAL.N) and US Airways Group (LCC.N) jumped after they reported strong profits, while Boeing Co (BA.N) buoyed the Dow after it boosted its full-year forecast.
Materials shares led the broad market higher, with Freeport-McMoRan Copper & Gold (FCX.N) gaining 2.8 percent to $95.33 and the S&P materials index (.GSPM) rose 2.3 percent. Commodities gained as the U.S. dollar dropped to a near 15-year low against the yen.
The indexes’ gains came the day after stocks posted their biggest loss in two months, suggesting investors thought Tuesday’s slide was overdone.
While Tuesday’s selling came on a day of heavy volume — a potentially bearish sign — the selloff was warranted, given recent complacency in the market, said Scott Marcouiller, chief technical market strategist at Wells Fargo Advisors in St. Louis.
«I take it as a healthy thing. It’s showing there’s fear in the marketplace,» said Marcouiller. «Now we’re testing the market to see, can it sustain this rally all day? If it doesn’t, it just means we’ve got a little more work to do.»
The Dow Jones industrial average (.DJI) gained 157.35 points, or 1.43 percent, to 11,135.97. The Standard & Poor’s 500 Index (.SPX) rose 15.68 points, or 1.34 percent, to 1,181.58. The Nasdaq Composite Index (.IXIC) climbed 31.13 points, or 1.28 percent, to 2,468.08.
Part of the complacency has come from expectations the Federal Reserve will mount further efforts to bolster the economy. Investors will be watching the Fed’s Beige Book, expected at 2 p.m. (1800 GMT), for more clues of the central bank’s thinking.
Eaton Corp (ETN.N) was among major industrial companies that raised their profit forecasts for the rest of the year, sending its shares up 3 percent at $85.90.
Earnings from the big banks were mixed. Wells Fargo & Co (WFC.N) and US Bancorp (USB.N) reported higher earnings, but Morgan Stanley (MS.N) reported a surprise loss.
Wells Fargo rose 3.4 percent to $25.39 and US Bancorp added 0.2 percent to $22.86, while Morgan Stanley gave up 1.2 percent at $25.09. Regional banks weighed on the KBW Bank Index (.BKX), down 1 percent, after Marshall & Ilsley Corp (MI.N) reported a larger-than-expected loss. Shares of Wisconsin’s largest bank lost 7.3 percent to $6.44.