Dow Climbs Amid Strong Earnings Reports
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Stocks rallied and ended the day in positive territory, as strong earnings reports from Morgan Stanley and FedEx buoyed investor sentiment about the economy’s strength.
The Dow Jones Industrial Average rose 104.62 points, or 0.95%, to 11079.46.The Nasdaq Composite Index rose 34.14, or 1.62%, to 2141.20. The Standard & Poor’s 500 index gained 12.08, or 0.97%, to 1252.20.
“The news out this morning confirms the idea that the economy is still on solid footing,” the chief investment strategist at McDonald Investments, John Caldwell, said. “The economy isn’t usually rolling over if FedEx is reporting volume gains.”
Mr. Caldwell said the strong duo of earnings reports from Morgan Stanley and FedEx showed markets’ fundamentals are still intact despite recent worries about interest rate levels.
Morgan Stanley rose $2.46, or 4%, to $59.48 as the investment bank’s second-quarter profit more than doubled to $1.96 billion, while net revenue in the period rose 48% to $8.94 billion.
FedEx climbed $5.54, or 5%, to $113.86 after it reported a 27% jump in profit for its fiscal fourth quarter, fueled by double-digit percentage growth in American ground deliveries and surging revenue from international shipments despite slower volume growth.
Dow industrial Hewlett-Packard advanced 88 cents, or 3%, to $33.74 after the computer and printer company said late Tuesday it will give its three main business groups more authority over their operational activities as part of a continuing companywide restructuring.
General Motors, another member of the Dow Jones industrial average, climbed 55 cents, or 2%,to $26.20.Kevin E. Wale, president and managing director of the automaker’s China Group, said Wednesday the company’s vehicle sales in China are expected to grow by “significantly more than 20%” in 2006.
Google (Nasdaq) rose $14.96, or 4%, to $402.13. The Internet search company continues to gain market share, according to research firm comScore Networks Inc.
Coventry Health Care gained $2.06, or 4%, to $51.78. Prudential Equity Group upgraded its rating of the health insurer, citing improving fundamentals and savvy underwriting that seems to be gaining traction.
American depositary shares of Teva Pharmaceutical (Nasdaq) lost $3.40, or 10%, to $32.27. The generic drug maker declined on concerns that its soon-to-be launched generic version of Merck’s cholesterol drug Zocor may end up being more expensive for consumers than the original product.