Stronger earnings reports push stocks higher
Published: Tuesday, January 11, 2011 at 4:06 p.m.
Last Modified: Tuesday, January 11, 2011 at 4:06 p.m.
NEW YORK — Strong financial reports from Alcoa and Sears helped push stock prices higher Tuesday.
Alcoa Inc. easily beat the forecasts of Wall Street analysts when it reported earnings late Monday. The aluminum maker said it expects demand for its products to jump 12 percent this year, including gains of up to 11 percent in sales to automakers.
Two major retailers raised their earnings forecasts. Sears Holdings Corp. said it expects to earn up to $1.88 per share this year, more than twice as much as analysts had predicted. Tiffany & Co. said better-than-expected holiday sales would push its earnings higher this year.
"Consumer stocks have been left for dead," said Matt Lloyd, the chief investment strategist at Advisors Asset Management. Consumer companies cut so many costs during the recession that any slight bump in spending "has a much bigger effect on margins," he said.
The Dow Jones industrial average rose 54 points, or 0.5 percent, to 11,691 in afternoon trading. The Standard and Poor's 500 index gained 6, or 0.5 percent, to 1,276. The Nasdaq composite rose 12, or 0.4 percent, to 2,719.
Gains were spread across the market. Energy companies gained 1.5 percent to lead the S&P 500 index. Telecommunications companies were the only one of the 10 company groups in the index to fall. That group lost 1.6 percent.
Hewlett-Packard Co. had the biggest gain among the 30 stocks that make up the Dow average, gaining 2.4 percent. Verizon Communications Inc. had the largest fall, dropping 1.9 percent.
European stock markets jumped after Japan said it would buy bonds being issued to finance Europe's bailout fund. That would help send bond yields down and ease debt pressures on countries like Ireland and Portugal. The Euro Stoxx 50, which tracks blue chip companies in countries that use the euro, rose 1.1 percent.
Supervalu Inc. fell 11 percent to $7.62 after the supermarket chain said it lost money in its last quarter. Homebuilder Lennar Corp. gained 8 percent, to 20.44, after its results topped analysts' forecasts.
Bond prices fell, sending their yields higher. The yield on the 10-year Treasury note rose to 3.35 percent from 3.29 percent late Monday. The yield is used to set interest rates on many kinds of loans including mortgages.