By Alexandra Scaggs
U.S. stocks gained broadly on Wednesday, as rising hopes of
economic stimulus from Asia helped boost investor confidence.
The Dow Jones Industrial Average rose 99 points, or 0.6%, to
16362. The S&P 500 index advanced 10 points, or 0.5%, to 1853,
with all 10 sectors higher.
The Nasdaq Composite Index climbed 23 points, or 0.6%, to 4057,
with its rise bolstered by gains in social-media and biotechnology
stocks. The Nasdaq Biotechnology Index rose 1.3%.
On Tuesday, stocks ended a roller-coaster session broadly
higher. The Dow closed up 89 points to post the best two-day point
gain since March 18.
Helping drive the gains was a report showing that China's gross
domestic product grew 7.4% in the first quarter, the slowest rate
in 18 months, but above economists' forecasts of 7.3%. Traders said
the slowing pace of growth raised some hopes of more stimulus from
the Chinese government.
"The Chinese data certainly corroborates the idea that the
economy is slowing, but at the same time officials have become
concerned enough" that more stimulus could be a possibility, said
Dan Greenhaus, chief market strategist at New York brokerage firm
BTIG.
And that is a positive factor for stocks globally, he said.
Stocks in Europe and Asia gained, with the Stoxx Europe 600 up
1.3%. Japan's Nikkei Stock Average shot up 3% after Bank of Japan
Governor Haruhiko Kuroda said he would closely monitor stock prices
and that inflation was on a steady track toward a 2.0% target.
China's Shanghai Composite gained 0.2%.
But U.S. traders said that the day's action didn't indicate a
broad rush into stocks. They said they didn't see many bets on
broad stock indexes--instead, investors were doing more trading in
shares of individual companies reporting earnings this week.
Trading has been "listless" this week, said Joseph Greco,
managing director of trading with New York brokerage Meridian
Equity Partners. "There was no conviction."
And the China news "started the motion," he said, so "that is
the direction [the market] is going to head."
That momentum helped offset mixed earnings reports. With 47
companies reporting, the S&P 500 is on pace to report that
first-quarter earnings declined 1.9% from the previous year,
according to FactSet, and that sales rose 2.2%.
U.S. stock-market gains this year will be mostly based on
earnings, said Christian Ledoux, director of equity research at
South Texas Money Management. "It is going to be bumpy for most of
the year... equity [valuations] are slightly above average, and
they're working their way toward overvalued."
Still, he said he is keeping his allocation to stocks steady,
since they are a good value when compared with investments such as
bonds.
Dow component Intel shares rose 0.2% after it reported late
Tuesday first-quarter earnings that topped analyst estimates, while
revenue was in line with its forecast and PC sales continued to
decline.
Yahoo surged 5.6% after first-quarter results exceeded
expectations, and the company provided an upbeat revenue outlook
for the current quarter.
Bank of America slipped 2.3% after the banking giant reported it
swung to a first-quarter loss as a result of previously-disclosed
litigation expenses, while revenue fell slightly less than
expected.
Stocks held their broad gains as Federal Reserve Chairwoman
Janet Yellen spoke about monetary policy and the economy at the
Economic Club of New York. The Fed's "beige book" report, a read on
the U.S. economy from anecdotes gathered by the central bank's 12
districts, is due later in the afternoon.
In other economic news, new residential construction for March
rose 2.8% to a seasonally adjusted annualized rate of 946,000,
falling well below forecasts of a rise of 6.4% to a seasonally
adjusted annualized rate of 965,000. Building permits fell 2.4% to
990,000, versus forecasts of 1.01 million.
Industrial production rose 0.7% in March, while a rise of 0.4%
was forecast. Capacity utilization rose by more than expected as
well.
The yield on the 10-year Treasury note rose to 2.637% from
2.628% late Tuesday. Gold futures gained 0.2% to $1,302.70 a troy
ounce, after falling 2% Tuesday to mark the biggest one-day
percentage loss since Dec. 19. Crude-oil futures slipped 0.3% to
$103.48 a barrel. The dollar rose against the yen, but lost some
ground against the euro.
In corporate news, New York investment bank Moelis & Co.
rose 5.4% in its public debut, after pricing its initial public
offering below its forecast range.
Google, which is due to report results after the close, rose
2.5%.
Twitter slipped 2.4%. The stock shot up 11% Tuesday, the biggest
one-day gain since the microblogging site went public in November.
Tuesday's rally came one day after some of the company's earliest
and biggest backers said they didn't plan to sell shares when rules
barring them from doing so expire next month.
Twitter had been one of the hardest-hit of the previous
highfliers, as the stock was down 37% on the year through Friday,
after ending last year 145% above its $26 initial public offering
price.
Write to Alexandra Scaggs at alexandra.scaggs@wsj.com