Wednesday, July 20, 2011
Stocks rebound on earnings, debt-limit plan
Associated Press
NEW YORK
Strong profits and a bipartisan plan to lift the U.S. debt limit drove a stock market rebound Tuesday.
Stock indexes rose after Coca-Cola, IBM and other companies reported better second-quarter earnings. The indexes added to their gains in the afternoon after President Barack Obama backed a proposal by six senators that would cut debt by $3.7 trillion over the next decade and raise the country’s $14.3 trillion debt ceiling.
The Dow Jones industrial average gained 202.26 points, or 1.6 percent, to close at 12,587.42. That’s the Dow’s largest one-day jump this year.
“It looks like there’s bipartisan support for a robust plan,” said Burt White, chief investment officer at LPL Financial in Boston. “The stock market had been looking for a reason to have a relief rally. And it looks like they got the start of one today. “
The ongoing deadlock in Washington over raising the country’s borrowing limit and Europe’s debt crisis have been weighing on markets this month. The Dow slid five of the previous seven days.
Information technology stocks led industry groups higher after IBM Corp.’s results beat analysts’ estimates. Corporate software spending held steady during the quarter. IBM’s stock rose 5.7 percent.
The tech gains could continue today. Apple Inc. reported another surge in earnings after the stock market closed as sales of iPhones and iPads again set records. The stock rose 6 percent to $399.53 in after-hours trading.
Coca-Cola Co.’s income increased 18 percent in the second quarter on stronger sales overseas. The world’s largest beverage maker raised some prices to offset higher ingredient costs. Coca-Cola’s stock was up 3.3 percent.
KeyCorp rose 4.3 percent after the Cleveland-based banking company reported a jump in earnings thanks to a drop in loan losses. The bank reported income of 25 cents a share, up from 3 cents a share a year ago.
Harley-Davidson Inc. rose 8.9 percent, making it the top performing stock in the S&P 500 index.