Wall St climbs as Alcoa's profit increases optimism

Written by Reuters
Friday, 09 October 2009 05:13

NEW YORK: U.S. stocks rose on Thursday, Oct 8 as a surprising quarterly profit from Alcoa Inc got third-quarter earnings off to a strong start, according to Reuters.

Alcoa gained 1.1 percent to US$14.35 and rose as high as US$15.10, a day after the Dow component posted its first profit after three consecutive quarterly losses, on cost savings and higher aluminum prices.

The S&P materials index gained 2 percent.

The rally lost some of its steam in the afternoon as the latest U.S. bond auction was poorly received after two previous successful debt sales, prompting some investors to trim holdings in U.S. assets.

Adding to positive sentiment, U.S. retailers posted generally strong same-store sales figures, while the Labor Department said the number of U.S. workers filing new jobless claims slid to a nine-month low last week.

"You had more positive economic news, and Alcoa numbers were better than expected on both revenue and net income. So that lends credibility to the bulls' thesis that the economy is gaining momentum," said Jim Awad, managing director at Zephyr Management in New York.

The Dow Jones industrial average rose 61.29 points, or 0.63 percent, to end at 9,786.87. The Standard & Poor's 500 Index gained 7.90 points, or 0.75 percent, to 1,065.48. The Nasdaq Composite Index advanced 13.60 points, or 0.64 percent, at 2,123.93.

The S&P 500 is now up 57.5 percent from its 12-year closing low on March 9.

U.S. retailers posted their first monthly sales increase in more than a year, suggesting that recession-battered consumers might be regaining their ability, and desire, to spend again.

Store chains such as Macy's Inc rose 5.1 percent to US$19.53 and Abercrombie & Fitch Co gained 5.5 percent to US$34.46. Kohl's Corp rose 2.4 percent to US$59.97. The Standard & Poor's Retail Index added 1.8 percent.

Home builders' shares rallied as members of Congress discussed a possible extension of an US$8,000 federal tax credit that covers first-time home buyers. The tax credit is set to expire on November 30. A Dow Jones index of home builders' stocks rose 6.2 percent, its best day since mid-May.

U.S. crude oil futures prices gained US$2.12, or 3 percent, to settle at US$71.69 a barrel, pushing shares of Chevron up 1.3 percent at US$71.45. - Reuters