Investors had a surge of optimism Wednesday ahead of the first major fourth-quarter earnings reports, sending stocks sharply higher and carrying the Dow Jones industrial average up more than 110 points.
Wall Street managed to shake its nervousness from earlier in the week, investing heavily in blue chips and tech stocks in the hopes that Intel Corp. and other major firms come through with positive earnings results.
The Dow index closed Wednesday up 111.19 points, or 1.1 percent, at 10,538.37, more than making up for a 58-point drop on Tuesday. Broader stock indicators also closed higher.
The tech-rich Nasdaq composite index closed 14.69 points higher, or up 0.7 percent at 2,111.13, while the Standard & Poor’s 500-stock index rose 9.30 points, or 0.8 percent, to 1,130.52.
Analysts were looking to Intel in particular to see if Wednesday’s gains could be sustained.
“Intel is going to have to blow out its numbers if we want to continue this rally tomorrow,” said Todd Leone, managing director of equity trading at SG Cowen Securities. “If not, you can probably expect a decent sell-off.”
Fellow high-tech bellwethers Apple Computer Inc. and Yahoo! Inc. were also expected to report earnings Wednesday afternoon. Intel was down 23 cents to $33.36 and Yahoo! fell 41 cents to $48.39, while Apple rose 10 cents to $24.22.
“What we’re hoping to see out of Intel and the others isn’t about the actual quarter, but the outlook for ’04,” said Jay Suskind, head trader at Ryan Beck & Co. “The quarterly outlook seems fine, but the markets focus on the future.”
Earlier in the day, Delta Air Lines disappointed Wall Street with higher-than-expected losses despite a year of cost-cutting measures. Nonetheless, Delta rose 1 cent to $12.15.
Investors were buoyed by positive economic data. The Commerce Department said the trade deficit shrank to $38 billion in December, the lowest level in a year and lower than Wall Street analysts expected. In addition, the Labor Department said wholesale prices rose by 0.3 percent in December, suggesting inflation is still in check.
The news helped investors offset Tuesday’s losses, which Brian Pears, head equity trader at Victory Capital Management, saw as a sign of resilience in the market’s overall recovery.
“Everybody was talking about the market was being overbought, and we got some selling yesterday that didn’t really seem to have a good reason behind it,” Pears said. “It’s nice to have a day of buying after that. It makes everyone less nervous.”
AT&T Wireless Services Inc. jumped 16 percent on reports that the cellular company is in talks to be acquired by Cingular Wireless, a joint venture of SBC Communications Inc. and BellSouth Corp. AT&T Wireless rose $1.34 to $9.89.
Advancing issues outnumbered decliners 9 to 5 on the New York Stock Exchange, where volume came was moderate.
The Russell 2000 index of smaller companies closed up 4.96 points, or 0.8 percent, at 586.12.
Overseas, Japan’s Nikkei stock average closed up 0.1 percent, Britain’s FTSE 100 was up 0.5 percent, France’s CAC-40 index closed 1.0 percent higher and Germany’s Xetra DAX rose 1.5 percent.