Stocks reversed their early losses and mounted a late-day rally Wednesday, after a sharp drop in oil prices and a reassuring assessment of the economy overcame investors’ disappointment over Intel Corp.’s earnings and troubling sales forecasts.
Intel’s profits and a warning of slow fourth-quarter sales rattled investors who had hoped for more bullish forecasts from corporate America. But the market drew solace from the Federal Reserve, which in its regular “Beige Book” breakdown of the economy said many parts of the country are still seeing decent growth despite high energy prices.
Stocks also got a boost from falling crude oil futures after the Energy Department reported larger-than-expected inventories of oil, gasoline and heating oil. A barrel of light crude fell nearly $1 on the New York Mercantile Exchange.
Yet earnings, and the Fed report were measures of the economy’s status weeks and months ago. The market is still nervous about rising inflation and consumer spending.
Bonds built on the previous session’s gains, with the yield on the 10-year Treasury note falling to 4.45 percent from 4.47 percent late Tuesday. The dollar was mixed against other major currencies, while gold prices fell.
The Dow rose 128.87, or 1.25 percent, to 10,414.13. Broader stock indicators also moved higher. The Standard & Poor’s 500 index climbed 17.62, or 1.5 percent, to 1,195.76, while the tech-focused Nasdaq composite index added 35.24, or 1.71 percent, to 2,091.24.
The Commerce Department said new housing construction rose in September to an annualized rate of 2.108 million units, far greater than the 1.975 million economists expected — a possible sign of a pickup in the cooling housing market.
In earnings news, Intel’s revenues were below Wall Street’s forecasts despite strong laptop computer sales. But it was the fourth-quarter outlook, which included warnings of slower sales, that caused nervous investors to sell off the stock, which slid 19 cents to $23.53.
The disappointment over Intel was mitigated by other positive earnings reports in the technology sector. Yahoo Inc. jumped $2.05 to $35.75 after beating analysts’ profit expectations by a penny per share on a 47 percent jump in sales, while Motorola Inc. climbed 88 cents to $21.05 on news that its quarterly profits tripled.
Dow industrial Altria Group Inc. rose 60 cents to $73.08 after reporting a 9 percent increase in profits. The conglomerate also said its Philip Morris USA division now boasts more than 50 percent of the cigarette market.
Fellow Dow component JPMorgan Chase & Co. took advantage of a strong stock market in the third quarter, which boosted its quarterly earnings 78 percent from a year ago. JPMorgan Chase, which also announced that Jamie Dimon will take over as chief executive six months early, rose 78 cents to $34.55.
Also in the financial sector, Bank of America Corp. rose 63 cents to $42.20 after posting a 10 percent increase in quarterly profits on the strength of its credit card and mortgage businesses.
Overseas, Japan’s Nikkei stock average fell 1.66 percent. In Europe, Britain’s FTSE 100 closed down 1.83 percent, France’s CAC-40 lost 1.93 percent and Germany’s DAX index tumbled 2.05 percent.