U.S. stocks rose for a second consecutive day as upbeat earnings reports and economic data bolstered hopes the recovery is beginning to strengthen. Even as worries about debt problems in Europe persisted and dollar reversed yesterday’s losses, investors appeared reassured that the domestic economy would strengthen its footing.
Deere (NYSE:DE) and Whole Food Markets (NASDAQ:WFMI) led the stocks higher after posting better-than-expected results. The companies also raised their forecasts. Priceline.com (NASDAQ:PCLN) also reported earnings that came in well ahead of estimates and revenue expectations.
A strong dollar sent the broad-based DJ-UBS commodities index lower, which dropped 0.3% to 133.928. However, crude prices rose 0.4% to a four-week high of $77.33, on improved recovery demand prospects, and gold prices advanced $3 to $1099.51. The FOMC minutes, meanwhile, assumed a more hawkish tone, intensifying expectations for a rate hike. The yield on the 2-year climbed six basis points and the 10-year 8 basis points as Treasury price declines reflected increased interest rate expectations.
While the weakness in dollar aided corporate results as companies with overseas exposure recorded improved sales in 2009, it remains to be seen how the recent rally impacts this year’s corporate profit outlook for industrials and tech firms with significant portions of overseas sales.
Nonetheless, the Fed raised its 2010 GDP forecast, lifting its estimates to 3.2% from November’s 3.0%, core inflation to 1.4% from 1.3%. However, unemployment forecast was raised to 9.6% from 9.5%. According to the report, “recent readings on consumer spending, industrial production and business outlays on equipment and software were seen as broadly consistent with the view that an economic recovery was underway, albeit at a moderate pace.”
Yesterday, the DJIA added 40 points to its previous day’s tally to close the day at 10,309. The NASDAQ gained 0.6% to 2,226 and the broader S&P500 index rose 0.4% to close a shade below 1100. On the NYSE, a modest 1.02 billion shares exchanged hands, as advancing issues beat those that declined by a two-to-one margin.
Eight of the ten S&P 500 industry sectors recorded gains during the session. Consumer services rose 0.9%, health care 0.8%, consumer goods 0.7%, industrials 0.6%, financials 0.4%, technology 0.4%, telecommunications 0.3%, basic materials 0.1%. On the downside, oil and gas shed 0.2% and utilities lost 0.1%.
After the close, Hewlett-Packard (NYSE:HPQ) reported earnings and revenues ahead of estimates on improved computer and server revenues. The firm raised its 2010 sales outlook, and increased second quarter earnings guidance. Applied Materials (NASDAQ:AMAT), also reporting after the close, posted strong quarterly results and raised guidance.
January’s federal budget release indicated the deficit narrowed to $42.6 billion. Forecast was for a $46 billion deficit.
Today’s earnings schedule shows companies including Wal-Mart (NYSE:WMT), DirecTV (NYSE:DTV), CBS (NYSE:CBS), Dell (NASDAQ:DELL), Goodyear Tire (NYSE:GT), Intuit (NASDAQ:INTU), and PSEG (NYSE:PEG) are expected to report their numbers. Economic reports and Fed-speak schedule is also heavy.
