Share

Wall St pops on Apple results, Fed

New York - US stocks rallied on Wednesday, with Apple's surge giving the Nasdaq its biggest gain of the year, while the Fed chairman reassured markets that the central bank would do more if necessary to lift the economy.

Apple Inc fueled optimism that the current earnings season would be much stronger than expected, generating gains across all market sectors. The iPad and iPhone maker's results, released after Tuesday's closing bell, showed that its quarterly profits nearly doubled, while its revenue easily topped expectations. The rally in Apple's stock especially benefited the S&P 500 tech sector index, which jumped 3.2%.

Federal Reserve Chairperson Ben Bernanke spurred further gains when he said the US central bank "would not hesitate" to launch another round of bond purchases to drive borrowing costs lower if it looked like the economy needed it.

Shares of Apple, which has the world's biggest market capitalisation, jumped 8.9% to end at $610. The stock scored its best daily gain in a little more than three years and Wednesday's rally added $46.3bn to Apple's market cap. Earlier, Apple surged 10.3% to a session high at $618.

At Wednesday's close, Apple accounted for 5.05 points -or 27% - of the S&P 500's gain for the day of 18.72 points, said Howard Silverblatt, senior analyst at Standard & Poor's.

Apple's results boosted S&P 500 companies' earnings growth to an estimated 6.9% for the first quarter, up from an estimate of 4.6% before Apple, according to Thomson Reuters data.

Apple's stock had sold off recently, partly on fears that its earnings could disappoint.

"It was a big relief" to many investors, said Giri Cherukuri, head trader at OakBrook Investments LLC in Lisle, Illinois, referring to Apple's results. "There were a lot of worries going into that earnings report. I think people were worried iPhone growth was going to slow, and it was the same thing with iPad growth.

"What they didn't take into account was iPhone growth throughout the world. That's what the market didn't see properly."

The Dow Jones industrial average shot up 89.16 points, to 13,090.72 at the close. The Standard & Poor's 500 Index rose 18.72 points, to 1,390.69. The Nasdaq Composite Index jumped 68.03 points, to 3,029.63, and scored its best daily percentage gain since December 20.

The earnings season so far has been stronger than expected. With 200 of the S&P 500 companies reporting, three-fourths have topped estimates, according to Thomson Reuters data.

Giving the Dow its biggest lift was Boeing. It posted higher quarterly profit, helped by increased commercial aircraft sales, and raised its earnings forecast for the year. The stock shot up 5.3% to $77.08.

On the down side, Caterpillar shares dropped 4.6% to $103.44 after it said profit rose 29%. But the heavy equipment maker stoked Wall Street's fears about emerging markets by repeatedly citing slowdowns in economic growth in China and Brazil.

After the closing bell, shares of Akamai Technologies fell 7.1% to $36 following the release of its results.

During the regular session, Bernanke's comments came as a welcome surprise to some stock investors.

"People looked at the FOMC statement and saw no mention of QE3, but in his press conference, Bernanke made it quite clear that additional asset purchases remain completely on the table. That may have been a revelation to some of the earlier sellers," said William O'Donnell, managing director and head of US Treasury strategy at RBS Securities in Stamford, Connecticut.

The Dow Jones Transportation Average ended up 0.9%, despite the day's downbeat economic data. Investors often watch the transportation average as an indicator of the stock market's future direction.

March durable goods orders fell 4.2% in the biggest drop in three years. The report was the latest to show softness in US economic data.

Volume was 6.8 billion shares on the New York Stock Exchange, the Nasdaq and the NYSE Amex, compared with the daily average this year of 6.77 billion.

Advancers outpaced decliners by a ratio of more than 3 to 1 on the NYSE and on the Nasdaq, nearly three stocks rose for every one that fell.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Rand - Dollar
18.94
-0.2%
Rand - Pound
23.91
-0.1%
Rand - Euro
20.43
+0.2%
Rand - Aus dollar
12.34
+0.1%
Rand - Yen
0.13
-0.2%
Platinum
910.50
+1.5%
Palladium
1,011.50
+1.0%
Gold
2,221.35
+1.2%
Silver
24.87
+0.9%
Brent-ruolie
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.8%
Resource 10
57,251
+2.8%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE
Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders