Decent corporate earnings revive stocks
Trader Michael Zicchinolfi, center, works on the floor of the New York Stock Exchange Tuesday. Even with the encouraging Alcoa report, investors were wary about the outcome of the fourth-quarter earnings season. (Jan. 8, 2013) Credit: AP
Stocks rose on Wall Street Wednesday after U.S. corporate earnings reports got off to a good start.
The Dow Jones industrial average climbed 61.66 points to 13,390.51, its first gain of the week. The Standard & Poor's 500 index gained 0.27 percent to 1,461.02, and the Nasdaq composite rose 0.45 percent to 3,105.81.
Having rallied after a last-minute resolution stopped the United States from going over the "fiscal cliff," stocks are facing their first big challenge of the year as companies start to report earnings for the fourth quarter of 2012. Throughout last year, analysts cut their outlook for earnings growth in the period and now expect them to rise by 3.21 percent, according to data from S&P Capital IQ.
"Maybe earnings expectations were a little too low," said Ryan Detrick, a strategist at Schaeffer's Investment Research. "You don't need to have great earnings, you just need to beat those expectations" for stocks to rally.
Early indications were decent. Aluminum maker Alcoa reported late Tuesday that it swung to a profit for the fourth quarter. The company brought in more revenue than analysts had expected.
Despite the better revenue number, Alcoa's stock ended down 2 cents at $9.08.
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