Stocks Advanced on Economic Optimism Led by Banks. Dow Leaders: BA, BAC, JPM, INTC, and XOM

Published on Wednesday, 10 March 2010 18:00 Written by Christopher Lynn

New York, March 10^th (TradersHuddle.com) – Stocks gained for a second day led by a rally in financial shares. An unexpected drop in wholesale inventories and improvement in the bond market added to economic optimism that the economic recovery is gathering momentum.

The Dow Jones Industrial Average added 2.95 points, or 0.03%. The S&P 500 index climbed 5.17 points, or 0.45%. The NASDAQ jumped 18.27 points, or 0.78%. Market breadth was positive. On the NYSE, winners topped decliners by a rate of 15 to 7. On the NASDAQ, advancers outpaced losers by a rate of 7to 4.

The market started to the upside, as financial companies rallied led by Citigroup, which surged another 3.66%, and Bank of America, which gained 1.85% and posted the second biggest gain in the Dow Jones Industrial Average, after bullish comments from a well known sector analyst. Economic data added to the optimism that the economic recovery is gathering strength and that companies earnings potential should improve.

In economic news, wholesales inventories unexpectedly fell 0.2 percent in January as sales rose to their highest level since October 2008; economists had expected to see a 0.2-percent increase in inventories.

Earlier, a report showed mortgage applications rose last week — even as mortgage rates rose.

Financial shares in the S&P 500 rallied 1.1 percent for the top gain among 10 industries. Consumer staples and telecom were the top decliners.

15 of 30 Dow components posted gains, with Boeing (NYSE:BA) leading the gains in the blue chip index as shares jumped 3.27% to $70.01. The maker of the new 787 Dreamliner and other commercial and military aircraft moved higher on economic optimism and after the company announced a study that a Boeing-built aerial tanker for the military would create 10 times as many new U.S. jobs as the now-withdrawn plan by Northrop Grumman Corp and EADS, parent of Airbus. The study was paid by Boeing and was done before Northrop and EADS announced this week that they would not bid to build the tanker in the end, saying new bid specifications favored Boeing's offer.

JPMorgan Chase (NYSE:JPM), the second largest U.S. lender, posted the third best gain in the Dow Jones Industrial Average, as shares climbed 1.20% to $42.93. The stock benefited of strength in the sector, amid bullish comments from well known Rochdale Securities analyst Dick Bove. The analyst said that two to three years from now, bank dividend payouts are going to be back up around 40%.

Intel (NASDAQ:INTC), the largest chipmaker in the world posted the fourth best gain in the blue chip index. Intel shares added 1.19% to $21.19, as the technology sector continued its uptrend with the tech heavy NASDAQ hitting a fresh 18-month high.

The fifth best Dow component was Exxon Mobil (NYSE:XOM), the largest energy producer in the U.S. climbed 0.66% to $67.22. Exxon moved higher after fellow Dow component Chevron (NYSE:CVX) was downgraded by JPMorgan, with the analyst stating that Exxon was a better value for investors.