Stocks Jump on Positive Earnings; BofA Skids

Published on Wednesday, 18 July 2012 18:27 Written by Christopher Lynn

New York, July 18^th (TradersHuddle.com) – Stocks gained for the second straight session, amid strong performances from Industrials and technology sectors following positive earnings reports. Ben Bernanke reaffirmed its prior testimony, saying that it stands ready to provide additional easing if needed to help an economy that it’s chugging along with moderate growth.

The Dow Jones Industrial Average jumped 103.16 points, or 0.81%. The S&P 500 index climbed 9.11 points, or 0.67%, while the NASDAQ rallied 32.56 points, or 1.12%.

The market started slightly lower amid a mixed overseas session and after the prior session rebound. Participants continued to digest Ben Bernanke’s testimony in Capitol Hill, in which he provided a gloomy economic outlook and highlighted the risks and uncertainty from the European debt crisis and the U.S. Fiscal Cliff. Earnings season heated up, with lackluster response amid mixed reports.

On the economic front, housing starts hit an annualized rate of 760,000 units during June, slightly better than consensus of 743,000. Ben Bernanke returned to Capitol Hill to testify before the House Financial Services Committee, where the Fed Chief reiterated that the central bank stands ready to provide additional stimulus measures. He added that the economy isn't likely to slide back into recession, seeing continued moderate growth.

Stocks were able to find a bid and move to higher ground, with most of the S&P 500 sectors ending with gains. Industrials and technology logged the best gains, while financials was the only sector ending in negative territory.

Before the open, several companies had reported its quarterly results. Bank of America (NYSE: BAC), Intel (NASDAQ: INTC), Yahoo (NASDAQ: YHOO), Honeywell (NYSE: HON), and Wynn Resorts (NASDAQ: WYNN) were among the companies that joined the earnings parade.

Banks pressured the financial sector. Bank of America (NYSE: BAC) plunged to the bottomed of the S&P 500 and the Dow Jones Industrial Average, as shares slumped nearly 5% to $7.53. Participants decided to dump the shares despite the bank reporting better than expected earnings. Meanwhile, Bank of New York Mellon (NYSE: BK) slid 0.14% after posting earnings that were inline with consensus.

On the flip side in the sector, US Bancorp (NYSE: USB) jumped 1.6% on the session after the lender beat on both the top and the bottom lines. Unum Group (NYSE: UNM) was the best performer in the sector, as UBS initiated coverage on the stock with a Buy rating.

Industrials saw a boost from the earnings from W.W. Grainger (NYSE: GWW) and Honeywell (NYSE: HON). The aircraft cockpit instruments provider rallied 6.7% to $58.18 after the company beat earnings expectations by $0.03 per share on revenues that missed consensus. However, Honeywell raised the low end of its full year earnings guidance range to inline with consensus.

Grainger surged 11%, posting one of the biggest gains in the broad market index after the company beat earnings expectations by a penny on revenues that were inline with consensus. The domestic and international business-to-business distributor raised the low end of its full year earnings guidance range, while reaffirming its revenue guidance for the year.

In tech land, Amphenol (NYSE: APH) surged nearly 15%, posting the biggest gain in the S&P500. The maker of fiber optics connectors beat quarterly earnings expectations by $0.02 per share on revenues that climbed 4.3% from a year ago to $1.06 billion. The company also raised full year guidance above consensus.

The sector also benefited from strength in computer peripheral companies like F5 Networks (NASDAQ: FFIV). The stock rallied 7.4% to $98.59 ahead of its quarterly results. In after hours, F5 lost 1% after the company reported inline quarterly results and provided downside guidance for fiscal first quarter.

Intel (NASDAQ: INTC) rallied 3.3% to $26.21 after the chipmaker topped earnings expectations. The stock gained despite the company forecasting weak current quarter sales, reinforcing fears that the debt crisis in Europe and a sluggish global economy will impact corporate results. Yahoo (NASDAQ: YHOO) climbed 0.64% after the company said it earned $0.27 per share, excluding non-recurring items, $0.01 better than consensus. Revenues climbed 0.5% from a year ago to $1.08 billion, which was slightly shy of consensus.

Another top mover in the sector was EMC Corp. (NYSE: EMC). The provider of enterprise storage systems, software, networks, and services jumped more than 9% after it announced top management changes and after the company said that results for the second quarter would be off by a penny from consensus on slightly better than expected revenues. It added that for the full year it continues to expect to achieve its full-year 2012 goals of $22 billion in revenue and non-GAAP EPS of $1.70.

Meanwhile, Apple (NASDAQ: AAPL) lost 0.11% in the session, as the stock has entered a holding pattern ahead of its quarterly results and amid increased chatter over the iPhone 5 possible launch date, as blog reports indicate the device is already in production in China.