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Major stock indices move up

20 January 2010 07:56 (UTC +04:00)

Baku- APA-Economics. US stocks ended higher on Tuesday, led by strength in technology space ahead of IBM results. A spate of healthcare and consumer product companies also gained. Investors also considered Citigroup’s quarterly loss, a stronger dollar and Kraft’s buyout of Cadbury, India Infoline News reported.
The Dow Jones Industrial Average rose 115 points, or 1.1%, to 10,725.43. The S&P 500 index added 14 points, or 1.3%, to 1,150.23. The Nasdaq Composite index added 32 points, or 1.4%, to 2,320.40.
The Dow and the S&P 500 ended at fresh 15-month highs and the Nasdaq ended at a new 16-month high.
After the close, IBM reported higher quarterly sales and earnings that topped estimates. But investors took a ’sell the news’ approach and sent shares 1% lower in extended-hours trading.
IBM said it earned US$3.59 per share versus US$3.28 a year ago. Analysts surveyed by Thomson Reuters thought IBM would earn US$3.47 per share. Sales rose modestly to US$27.23 billion from US$27 billion a year ago. Analysts thought sales would dip to US$26.96 billion.
Looking forward, IBM said it expects earnings per share of at least US$11 for 2010.
US stocks opened weaker following Citigroup’s results, but soon turned higher as investors found reason to jump back into the market after Monday’s holiday. Gains were broad based, with 26 of 30 Dow components rising.
Healthcare stocks jumped on bets that a Republican election to the Massachusetts US Senate seat previously held by the late Ted Kennedy could stall or kill healthcare reform by ending the Democrats’ filibuster-proof status.
All US financial markets were closed on Monday for the Martin Luther King holiday. Markets on Friday ended lower despite better-than-expected profit reports from JPMorgan Chase and Intel.
After a robust 2009, stocks were expected to drift at the beginning of the new year. But the momentum has remained positive and year-to-date, the S&P 500 is up 3%.
Citigroup reported a US$7.6 billion quarterly loss, partly due to the bank paying back the government US$20 billion in bailout funds. On a per-share basis, Citigroup lost 33 cents, in line with forecasts, after reporting a loss of US$2.44 a share in the prior year’s quarter.
On the upside, the company said consumer credit losses dropped in the quarter, and that it also set aside less money for bad loans during the quarter.
Some 57 of the companies in the S&P 500 are due to report results this week, with the focus on banks. Wells Fargo, Bank of America, Morgan Stanley, American Express and a number of regional banks are all due.
S&P 500 earnings are expected to have risen 186% versus a year ago and revenue is expected to have risen 7% according to the latest forecast from earnings tracker Thomson Reuters. But without the financial sector, earnings growth slips to 8% and revenue growth falls to 1%.
Cadbury agreed to a larger US$19.5 billion takeover offer from US food maker Kraft Foods in a deal that puts an end to a four-month fight. The board on Tuesday recommended shareholders take Kraft’s cash-and-stock offer in a move that will create the world’s biggest chocolate maker.
Shares of Kraft, a Dow component, fell 0.6%, cutting earlier losses. American-traded shares of Cadbury rose 6%.
The dollar gained versus the euro and the yen.
COMEX gold for February delivery rose US$9.50 to settle at US$1,140 an ounce. Gold closed at an all-time high of US$1,218.30 an ounce last month.
US light crude oil for February delivery rose US$1.02 to settle at US$79.02 a barrel on the New York Mercantile Exchange.
Treasury prices fell, raising the yield on the 10-year note to 3.69% from 3.67%.
European shares advanced, helped by deal-inspired gains for Cadbury and due to gains in pharma and telecom firms. The pan-European Dow Jones Stoxx 600 index gained 0.8% at 260.27.
The UK’s FTSE 100 index closed up 0.3% at 5,513.14, while the German DAX index advanced 1% to 5,976.48 and the French CAC-40 index climbed 0.8% to 4,009.67.