USA: High corporate earnings drive the Dow Jones Industrial Average over 13,000 for the first time

The Dow Jones Industrial Average, a bellwether indicator of how well U.S. large cap stocks are performing, topped 13,000 for the first time, driven by stronger than expected corporate earnings and Alcoa Inc.'s plans to explore the sale of part of its business. U.S. stocks rose substantially on Wednesday (April 25) as a result of higher-than-expected earnings and Alcoa Inc.'s plan to explore the sale of its packaging business, pushing the Dow Jones industrial average to 13,000 for the first time. Shares of Alcoa, the world's largest aluminum company and a Dow component, rose sharply after the company said it might sell the packaging and consumer business, whose products include Reynolds Wrap. The Dow average leapt to an intraday record of 13,036.99 within minutes of the market's open. Earlier, data showed orders for durable goods -- costly and long-lasting manufactured items -- rose more than expected in March. The report helped to calm concerns about the economy, while news of earnings showed surprising strength. "I think 13,000 is a sentimental stepping stone. It is a validation that the U.S. economy is doing well, that corporate earnings in general are holding up fairly nicely and that it's rewarding to investors to be invested rather than to be sitting on the sidelines in cash," said Sam Stovall, Chief Investment Strategist for Standard & Poor's Equity Research in New York. The Dow Jones industrial average was up 31.12 points, or 0.24 percent, at 12,985.06. The Standard & Poor's 500 Index was up 3.32 points, or 0.22 percent, at 1,483.73. The Nasdaq Composite Index was up 2.75 points, or 0.11 percent, at 2,527.29. Despite the day's good news, Stovall warned investors not to expect too much this year. "I would warn investors about getting too caught up in the euphoria right now and expecting to see a large, attractive double digit price appreciation this year. My feeling is, in a soft landing environment combined with de-accelerating corporate earnings, we're probably lucky if we get a high single digit appreciation," said Stovall, who predicts large cap stocks to gain on average about 6.5 percent in 2007. Housing data sent home builders lower but failed to dampen the gains in stocks. New home sales rose in March but fell short of the pace forecast by analysts. A decline in last month's existing home sales kept shares under pressure on Tuesday. Specialty glass maker Corning Inc. and oil field services company Baker Hughes Inc. were among the companies reporting profits that topped Wall Street estimates. Corning shares jumped 4.6 percent to $24.86 and Baker Hughes climbed 2 percent to $76.61, both on the NYSE. The Nasdaq composite was lifted by Amazon.com Inc. after the online retailer said late on Tuesday quarterly profit more than doubled. Amazon shares shot up 20 percent to $53.65. Aerospace manufacturer Boeing Co. posted higher-than-forecast earnings. The stock rose only slightly, its gains capped by a lackluster revenue outlook. Alcoa stock was up 6.6 percent to $36.25. Boeing shares slipped 0.7 percent to $93.03.

ITN Source | April 26, 2007

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