Stocks closed higher as Citigroup's earnings lifted bank stocks ahead of a cluster of earnings reports this week, including Apple and IBM, which report after the market closes.
The Dow Jones Industrial Average rose 80.91 points, or 0.7 percent, to 11,143.69. Bank of America [BAC 12.34 0.36 (+3.01%) ] and JPMorgan [JPM 38.20 1.05 (+2.83%) ] rose, while Intel [INTC 19.19 -0.13 (-0.67%) ] and Home Depot [HD 30.53 -0.17 (-0.55%) ] fell.
The S&P 500 Index rose 8.52 points, or 0.7 percent, to 1,184.71. The Nasdaq rose 11.89 points, or 0.5 percent, to 2,480.66. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 19.
All major indexes reached new five-month highs and are up for the month. The Dow has gained 3.3 percent, the S&P 500 has gained nearly 4 percent, and the Nasdaq has gained more than 4.5 percent.
The dollar [.DXY 77.075 0.14 (+0.18%) ], meanwhile, slipped against a basket of currencies, after rising earlier in the session. Banks, utilities and health care sectors rose, while consumer discretionary stocks fell.
"Leadership here really seems to be centered on the financials, I think in part because you had Citigroup come through this morning with numbers better than expected, and their story did not exacerbate the worries about some of the foreclosure concerns," said Craig Peckham, equity product strategist at Jefferies.
Market participants were also continuing to weigh the size, timing and probability of monetary easing provided by the Federal Reserve, Peckham said.
"There a persistent, high level of expectation and enthusiasm for asset prices," given the potential for the Fed to boost the economy, he added.
The week ahead features earnings releases from a fifth of the stocks in the S&P 500, including Apple [AAPL 318.00 3.26 (+1.04%) ] and IBM [IBM 142.83 1.77 (+1.25%) ]. A number of Dow components also report throughout the week. So far, many earnings reports, ranging from JPMorgan to Citigroup, Google [GOOG 617.71 16.26 (+2.7%) ], and Hasbro, have come in strong.
"It underscores the corporate part of the economy is in very, very good health," Jeffrey Palma, a market strategist at UBS Securities said on CNBC.
Palma, however, is concerned expectations are too high going into next year.
"We're seeing growth forecasts for next year being predicated on another expectation of profit margin increases," Palma said.
Citigroup's [C 4.17 0.22 (+5.57%) ] shares rose more than 3 percent after the bank reported quarterly earnings that beat analyst expectations. Net income for Citi, however, dropped 20 percent from the quarter before.
All eyes have been on the banking sector as financial stocks fell sharply last Thursday and Friday. Investors were worried the fallout from the growing crisis could lead to big costs for companies.
In a note to clients, J.P. Morgan said errors in foreclosure-processes that could lead to banks having to repurchase home loans could cost the banking industry up to $120 billion.
Citi's results appeared to have lifted the banking sector Monday, as the KBW Banking Index [BKX 46.59 1.35 (+2.98%) ] rose more than 2 percent.
Bank of America and Wells Fargo [WFC 24.87 1.29 (+5.47%) ] were among the banks trading higher Monday. Both post earnings results later this week. Bank of America's shares spiked higher after news it would resume foreclosures in 23 states on Oct. 25.
Industrial production fell 0.2 percent in September, instead of rising 0.2 percent as expected. Capacity utilization, meanwhile, slipped to 74.7 percent, 4.2 percentage points above a year ago, and close to expectations.
Dallas Federal Reserve President Richard Fisher said on CNBC early Monday that the Fed can't help the economy alone, and Citi reported better-than-expected earnings. Fisher also said the Federal Reserve needs the help of fiscal and regulatory authorities if it is to help the US economy grow at a faster pace.
Later in the day, Atlanta Fed President Dennis Lockart said the U.S. economy is weak enough to warrant further monetary easing by the Federal Reserve.
Federal Reserve Chairman Ben Bernanke said on Friday that high unemployment and low inflation point to a need for a further easing of U.S. monetary policy, fueling speculation that the Fed might take further steps to boost the economy as early as November.
The Dow Jones Industrial Average rose 80.91 points, or 0.7 percent, to 11,143.69. Bank of America [BAC 12.34 0.36 (+3.01%) ] and JPMorgan [JPM 38.20 1.05 (+2.83%) ] rose, while Intel [INTC 19.19 -0.13 (-0.67%) ] and Home Depot [HD 30.53 -0.17 (-0.55%) ] fell.
The S&P 500 Index rose 8.52 points, or 0.7 percent, to 1,184.71. The Nasdaq rose 11.89 points, or 0.5 percent, to 2,480.66. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 19.
All major indexes reached new five-month highs and are up for the month. The Dow has gained 3.3 percent, the S&P 500 has gained nearly 4 percent, and the Nasdaq has gained more than 4.5 percent.
The dollar [.DXY 77.075 0.14 (+0.18%) ], meanwhile, slipped against a basket of currencies, after rising earlier in the session. Banks, utilities and health care sectors rose, while consumer discretionary stocks fell.
"Leadership here really seems to be centered on the financials, I think in part because you had Citigroup come through this morning with numbers better than expected, and their story did not exacerbate the worries about some of the foreclosure concerns," said Craig Peckham, equity product strategist at Jefferies.
Market participants were also continuing to weigh the size, timing and probability of monetary easing provided by the Federal Reserve, Peckham said.
"There a persistent, high level of expectation and enthusiasm for asset prices," given the potential for the Fed to boost the economy, he added.
The week ahead features earnings releases from a fifth of the stocks in the S&P 500, including Apple [AAPL 318.00 3.26 (+1.04%) ] and IBM [IBM 142.83 1.77 (+1.25%) ]. A number of Dow components also report throughout the week. So far, many earnings reports, ranging from JPMorgan to Citigroup, Google [GOOG 617.71 16.26 (+2.7%) ], and Hasbro, have come in strong.
"It underscores the corporate part of the economy is in very, very good health," Jeffrey Palma, a market strategist at UBS Securities said on CNBC.
Palma, however, is concerned expectations are too high going into next year.
"We're seeing growth forecasts for next year being predicated on another expectation of profit margin increases," Palma said.
Citigroup's [C 4.17 0.22 (+5.57%) ] shares rose more than 3 percent after the bank reported quarterly earnings that beat analyst expectations. Net income for Citi, however, dropped 20 percent from the quarter before.
All eyes have been on the banking sector as financial stocks fell sharply last Thursday and Friday. Investors were worried the fallout from the growing crisis could lead to big costs for companies.
In a note to clients, J.P. Morgan said errors in foreclosure-processes that could lead to banks having to repurchase home loans could cost the banking industry up to $120 billion.
Citi's results appeared to have lifted the banking sector Monday, as the KBW Banking Index [BKX 46.59 1.35 (+2.98%) ] rose more than 2 percent.
Bank of America and Wells Fargo [WFC 24.87 1.29 (+5.47%) ] were among the banks trading higher Monday. Both post earnings results later this week. Bank of America's shares spiked higher after news it would resume foreclosures in 23 states on Oct. 25.
Industrial production fell 0.2 percent in September, instead of rising 0.2 percent as expected. Capacity utilization, meanwhile, slipped to 74.7 percent, 4.2 percentage points above a year ago, and close to expectations.
Dallas Federal Reserve President Richard Fisher said on CNBC early Monday that the Fed can't help the economy alone, and Citi reported better-than-expected earnings. Fisher also said the Federal Reserve needs the help of fiscal and regulatory authorities if it is to help the US economy grow at a faster pace.
Later in the day, Atlanta Fed President Dennis Lockart said the U.S. economy is weak enough to warrant further monetary easing by the Federal Reserve.
Federal Reserve Chairman Ben Bernanke said on Friday that high unemployment and low inflation point to a need for a further easing of U.S. monetary policy, fueling speculation that the Fed might take further steps to boost the economy as early as November.
No comments:
Post a Comment