US shares rally on earnings boost
October 22, 2009
New York - Wall Street shares jumped on Thursday on mostly positive third quarter corporate earnings, which helped the market look past a surprise rise in new claims for unemployment benefits.
The Dow Jones Industrial Average climbed 131.95 points (1.33 percent) to close at 10,081.31, rebounding from losses in the prior session.
The Nasdaq composite rose 14.56 points (0.68 percent) to 2,165.29 and the broad-market Standard & Poor's 500 index added 11.51 points (1.06 percent) to 1,092.91.
The market shook off a weak start in early trading as investors weighed fresh data showing new jobless claims rising again after dropping for two weeks.
But stocks climbed rapidly as more companies reported better than expected earnings.
"Today's earnings report flow reaffirmed our belief that third quarter earnings will be good and in many cases better than expected even after considering that estimates for the third quarter were more aggressive than they were previously, which largely is due to earnings reported for the second quarter," said Gregory Drahuschak of Janney Montgomery Scott LLC.
The intense flow of earnings reports lasts through next week and then tapers off in November.
"Earnings reports are in full swing, with many companies reporting earnings better than estimated, and some are reporting revenue growth versus a year ago," analysts from Charles Schwab & Co said in a clients' note.
Earlier, the Labor Department said the seasonally adjusted number of jobless claims in the week to October 17 rose 2.1 percent or 11,000 to 531,000 from the previous week's revised figure of 520,000.
It was higher than the 515,000 forecast by most economists but the four-week moving average, which smooths out week-to-week volatility, fell slightly to 532,250 - a drop of 750 from the previous week's revised average of 533,000.
The total number of Americans receiving unemployment benefits also shrank.
"Statistically, the change is negligible, but in the real world it is a telling reminder that the labor market remains extremely weak 22 months into the official recession," said Patrick O'Hare of Briefing.com.
Among key companies that declared financial results beating Wall Street estimates were fast food chain McDonald's, whose stock rose 2.01 percent to 59.50 dollars and pharmaceutical giant Merck, up 0.58 percent to 32.87 dollars.
Others included telephone company AT&T, up 0.62 percent at 26.10 dollars, insurer Travelers, which jumped 7.66 percent to 51.70 dollars, and manufacturing group 3M, adding 3.22 percent to 78.79 dollars.
Microsoft gained 0.04 percent to 26.59 dollars after the software giant launched its first operating system in three years, Windows 7.
The bond market declined. The yield on the 10-year Treasury bond rose to 3.421 percent from 3.411 percent Wednesday and that on the 30-year bond climbed to 4.249 percent from 4.230 percent. - AFP
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