Stocks Rallied Amid Positive Earnings and Spanish Bond Auction

Published on Tuesday, 17 April 2012 19:09 Written by Christopher Lynn

New York, April 17^th (TradersHuddle.com) – Stocks rallied, with the Dow surging past 13,000 and the NASDAQ ending above 3,000, after favorable earnings and solid demand in a Spanish short-term bond auction helped boost sentiment amid largely inline U.S. economic data and better than expected reading of German business confidence.

The Dow Jones Industrial Average jumped 194.13 points, or 1.5%. The S&P 500 index rallied 21.21 points, or 1.55%, while the NASDAQ spiked 54.42 points, or 1.82%.

The market started in positive territory amid strength in European trading, following a successful short-term Spanish bond auction and better than expected German business confidence. Economic data in the U.S. was lackluster with both housing starts and industrial production data slightly below expectations. However, earnings reports were mostly better than expected, which helped boost sentiment.

The move gathered steam as participants focused on earnings and as fears over Spain being able to finance its debt eased. A risk-on trade was established, as the Treasury 10-year yield ticked just above 2%. The rally was broad based with all of the 30 Dow components ending with gains in the session and all of the select S&P 500 sectors closing in positive territory.

Technology, which was the worst performer in the prior session by losing more than 1%, rebounded sharply as the Technology Select Sector ETF (NYSE: XLK) jumped 2.18%, to post the best gain amid the S&P 500 sectors. Industrials and energy were the only other sectors that outperformed the broad market index.

Tech was helped by the strong performance from Apple (NASDAQ: AAPL), which rebounded from its worst 5-session decline in over 3 years. The stock rallied over 5% to $609.7 after Raymond James initiated coverage on the tech giant with a Strong Buy and a target price of $800. Mizuho also said that it expects upside to revenues and earnings when Apple reports on April 24^th, with iPhones being the primary source of upside. Additionally, Telsey Advisory Group said that it anticipates solid earnings and revenue growth thanks to the launch of the iPhone 4S in China and the new iPad.

First Solar (NASDAQ: FSLR) also helped the NASDAQ to outperform and to spike above the 3,000 level. The stock surged to the top of the S&P 500 index, as shares rallied 10.28% to $22.96 on news it is laying off 2,000 workers and closing its plant in Frankfurt Germany. First Solar along other solar companies have been struggling amid falling demand and Chinese over capacity.

IBM (NYSE: IBM) gained 2.33% to $207.45 ahead of its quarterly results after the close on news that it has sold its Retail Store Solutions business for $850 million to Toshiba TEC. In after hours, IBM was falling 2.5% to $202.26 on reaction to mixed quarterly results. The company beat earnings expectations by $0.15 per share, but revenues were just slightly below consensus. IBM issued upside fiscal 2012 earnings guidance.

Intel (NASDAQ: INTC) was another Dow component that gained ahead of its quarterly results. The stock added 0.23% to $28.47. In after hours, the stock was tumbling 2.77% to $28.47 after the company posted earnings of $0.56 per share, $0.03 better than consensus, on revenues that climbed 0.5% from a year ago period to $12.91 billion, which was largely seen as inline with consensus of $12.84 billion. Intel disappointed investors, as it provided lackluster revenue guidance for the current quarter.

Energy received a boost from raising crude oil prices. The commodity gained amid U.S. and German economic data and as European debt fears eased. Oil jumped to $104.75 even as President Obama unveiled a new plan to a $52 billion program to strengthen federal supervision of oil markets, which the majority of traders saw as an election year gimmick. Newfield Exploration (NYSE: NFX) jumped 4.5% on strong volume after Jefferies raised its recommendation on the shares to a Buy from Hold, posting one of the biggest gains in the sector.

In the industrial sector, FedEx (NYSE: FDX) gained 2.6% to $90.46 on news that the company is on talks to buy French shipping firm Tatex. Year to date, the stock has climbed 8.3%, underperforming the S&P 500 index.

Financials were active following earnings reports in the space. Goldman Sachs (NYSE: GS) fell 0.74% despite beating earnings expectations and raising its dividend by 31.4% to $0.46 per share.

U.S. Bancorp (NYSE: USB) gained 1.25% to $31.55 after posting better than expected quarterly results. Meanwhile, Bank of America (NYSE: BAC) jumped 1.5% to $8.92 amid news that the lender plans to sell its non –US wealth management business, which could fetch up to $3 billion.

Elsewhere in the consumer space, Netflix (NASDAQ: NFLX) surged 5.8% to $107.02, posting the second biggest gain in the S&P 500.

Also boosting the space was Coca-Cola (NYSE: KO), which surged to a 12 year high after the company announced favorable quarterly results amid improved sales and cost cutting efforts. Coca-Coal jumped 2% to $73.95, leading the charge in the blue chip index. Shares of Walgreen (NYSE: WAG) rallied 5.3%, posting one of the biggest gains in the broad market index after UBS added the stock to its most preferred list, saying it expects the dispute will Express Scripts would be resolved.