Stocks Rally On Upbeat Tech Earnings, Yellen Comments - U.S. Commentary

(RTTNews) - Stocks moved sharply higher over the course of the trading day on Wednesday, further offsetting the steep losses posted late last week. The markets benefited from a positive reaction to the latest earnings news as well as remarks by Federal Reserve Chairman Janet Yellen.

The major averages saw further upside going into the close, ending the session at their best levels of the day. The Dow surged up 162.29 points or 1 percent to 16,424.85, the Nasdaq jumped 52.06 points or 1.3 percent to 4,086.23 and the S&P 500 shot up 19.33 points or 1.1 percent to 1,862.31.

The continued recovery on Wall Street was partly due to some upbeat tech earnings, with shares of Yahoo (YHOO) surging higher after the online media giant reported its first quarter results.

Yahoo released its quarterly results after the close of trading on Tuesday, reporting earnings and revenues that exceeded analyst estimates.

Semiconductor giant Intel (INTC) posted a more modest gain after reporting better than expected first quarter earnings but on revenues that came in just shy of expectations.

Looking ahead, Intel forecast full-year gross margin of 61 percent, plus or minus a few percentage points, 1 percentage point higher than its previous estimate.

Positive sentiment was also generated by comments from Fed Chair Janet Yellen, who indicated that the central bank will keep benchmark interest rates at exceptionally low levels for a considerable time.

Speaking to the Economic Club of New York, Yellen acknowledged that economic growth slowed over the winter but suggested that a significant part of the weakness was due to unusually cold winter weather.

She insisted again that the Fed will remain highly accommodative until employment and inflation reach healthier levels.

Additionally, the Fed released a report before the start of trading showing a bigger than expected increase in industrial production in the month of March.

The report said industrial production increased by 0.7 percent in March after surging up by an upwardly revised 1.2 percent in February. Economists had been expecting production to rise by about 0.5 percent.

A separate report from the Commerce Department showed a notable increase in housing starts in the month of March, although starts still came in below economist estimates.

Later in the day, the Fed's Beige Book noted that economic activity has increased in most regions of the country since the previous report.

The Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Fed districts, noted that some districts reported a rebound in activity following weather-related slowdowns earlier in the year.

Sector News

While most of the major sectors moved to the upside, airline stocks posted some particularly strong gains on the day. The NYSE Arca Airline Index surged up by 2.8 percent, climbing further off the one-month closing low that it set on Monday.

JetBlue (JBLU), Delta Air Lines (DAL), and American Airlines (AAL) turned in some of the airline sector's best performances.

Substantial strength was also visible among biotechnology stocks, as reflected by the 2.5 percent gain posted by the NYSE Arca Biotechnology Index. ImmunoGen (IMGN) helped lead the sector higher after Canaccord Genuity initiated coverage of the company's stock with a Buy rating.

Brokerage stocks also saw considerable strength on the day, driving the NYSE Arca Broker/Dealer Index up by 2.4 percent. Interactive Brokers (IBKR) posted a standout gain after reporting better than expected first quarter earnings.

Chemical, defense, natural gas, and trucking stocks also saw significant strength, while gold stocks bucked the uptrend by the broader markets.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index soared by 3 percent, while China's Shanghai Composite Index edged up by 0.2 percent.

The major European markets also moved to the upside on the day. While the U.K.'s FTSE 100 Index advanced by 0.7 percent, the French CAC 40 Index and the German DAX Index jumped by 1.4 percent and 1.6 percent, respectively.

In the bond market, treasuries climbed well off their early lows but still ended the day in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by less than a basis point to 2.637 percent.

Looking Ahead

While trading activity on Thursday may be somewhat subdued ahead of the holiday on Friday, earnings news is likely to be in focus in the early part of the session.

American Express (AXP), Google (GOOG), and IBM (IBM) are among the companies releasing their quarterly results after the close of today's trading, while DuPont (DD), General Electric (GE), and Goldman Sachs (GS) are among those due to report their results before the start of trading on Thursday.

Trading could also be impacted by the release of reports on weekly jobless claims and Philadelphia-area manufacturing activity.