Tucson CitizenTucson Citizen

Stocks surge to 2-month high

NEW YORK – Stocks surged Thursday to their highest levels in two months after banking giant Wells Fargo & Co. surprised the market with an early profit report that blew past analysts’ expectations thanks to a strong pickup in its lending business.

The Dow Jones industrial average jumped nearly 250 points and major market indexes logged their fifth straight week of gains. Markets are closed for Good Friday.

Investors have been grasping at any sign of improvement in the crippled banking industry, and Wells Fargo’s report Thursday that it expects first-quarter earnings of $3 billion provided an encouraging sign that a deep freeze in borrowing activity may finally be thawing. Wells Fargo said it benefited from its January acquisition of Wachovia and an increase in mortgage applications.

“The fact that Wells Fargo can have record profits despite the troubles facing the banking system tells you something,” said Rick Campagna, chief investment officer at 300 North Capital in Pasadena, Calif. “It’s very good news.”

According to preliminary calculations, the Dow rose 246.27, or 3.1 percent, to 8,083.38. It was the blue chips’ first close above the 8,000 mark in nearly a week and the highest finish since Feb. 9. The Dow hadn’t logged five straight weekly gains since Oct. 2007, the stock market’s peak.

Broader stock indicators also rose sharply. The Standard & Poor’s 500 index rose 31.40, or 3.8 percent, to 856.56. Like the Dow, it was the highest close for the S&P 500 since Feb. 9.

The Nasdaq composite index rose 61.88, or 3.9 percent, to 1,652.54, its highest finish of the year. In 2009, the index is up 4.8 percent.

For the week, the Dow rose 0.8 percent, the S&P 500 rose 1.7 percent and the Nasdaq added 1.9 percent.

The report from Wells Fargo injected a decisively upbeat tone into the market after three days of choppy trading earlier this week, when stocks appeared to be taking a breather after barreling ahead more than 20 percent in March. Analysts see occasional pullbacks as signs of a healthy market as investors allocate money carefully instead of just following a frenzied crowd.

Bank shares had been sluggish this week following worrisome forecasts from key analysts about the bad loans they still carry on their balance sheets and other long-term woes. Major banks begin reporting first-quarter results next week.

Wells Fargo jumped 31.7 percent Thursday and several other major banks also barreled higher, including Bank of America Corp. up 35.3 percent; JPMorgan Chase & Co. up 19.4 percent, and Citigroup Inc., up 12.6 percent.

Investors appeared unfazed by uneven monthly sales reports from retailers and mixed economic news.

Wal-Mart Stores Inc. reported lower-than-expected sales in March, sending its shares down 3.7 percent, making it one of only three stocks to fall among the 30 companies that make up the Dow.

Target Corp. rose 6.1 percent after posting results that topped expectations, while teen clothing retailer Abercrombie & Fitch Co. slid 3.5 percent after its numbers came in weaker than expected.

In economic news, new jobless claims fell more than expected last week, but those continuing to receive unemployment benefits set another high. The total number of laid-off Americans receiving unemployment rose to 5.84 million from 5.75 million, the most on record since 1967 and more than analysts expected.

The jump in stocks comes at the end of a relatively quiet holiday week.

Investors have been worried in recent days that the upcoming corporate earnings season could bring bad news about how companies expect the rest of the year to turn out. But the market’s tone brightened somewhat on Wednesday on reports that the government will provide support for battered life insurers and a merger deal between two major homebuilders.

Ted Aronson, a partner at Aronson-Johnson-Ortiz in Philadelphia, said Wells Fargo’s upbeat preview into its earnings could place a greater burden on banks reporting results next week. Wells Fargo doesn’t report its full results until April 22.

“I’m not sure everyone will be as successful, but we’d like to hope that the success will spill over,” Aronson said.

In other trading, the Russell 2000 index of smaller companies jumped 26.08, or 5.9 percent, to 468.20.

About seven stocks rose for every one that fell on the New York Stock Exchange. Volume came to 1.8 billion shares.

Treasury prices fell as the stock rally damped demand for safe-haven investments. The yield on the 10-year Treasury note rose to 2.93 percent from 2.86 percent late Wednesday.

The dollar was mixed against other major currencies, while gold prices fell.

Light, sweet crude rose $2.73 to $52.11 on the New York Mercantile Exchange.

Overseas, Japan’s Nikkei stock average rose 3.7 percent following reports that the country’s ruling party is seeking a stimulus package bigger than originally announced. Britain’s FTSE 100 gained 1.5 percent, Germany’s DAX index rose 3 percent, and France’s CAC-40 rose 1.8 percent.

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ON THE WEB

New York Stock Exchange: www.nyse.com

Nasdaq Stock Market: www.nasdaq.com

Citizen Online Archive, 2006-2009

This archive contains all the stories that appeared on the Tucson Citizen's website from mid-2006 to June 1, 2009.

In 2010, a power surge fried a server that contained all of videos linked to dozens of stories in this archive. Also, a server that contained all of the databases for dozens of stories was accidentally erased, so all of those links are broken as well. However, all of the text and photos that accompanied some stories have been preserved.

For all of the stories that were archived by the Tucson Citizen newspaper's library in a digital archive between 1993 and 2009, go to Morgue Part 2

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