Stocks Snap Five-Day Losing Streak
NEW YORK ( TheStreet) - U.S. stocks snapped a five-day losing streak on Wednesday with buyers out in force as anxiety over the eurozone eased and Alcoa's(AA) profit surprise lifted hopes for a better than expected first-quarter reporting season.
Spanish bond yields stabilized Wednesday after a European Central Bank official hinted at intervention if the situation in the country deteriorated. The markets were on high alert Tuesday, as yields spiked after Spain warned its banks may need more capital if the economy there weakens further.
The Dow Jones Industrial Average rose 89 points, or 0.7%, to close at 12,805. The index's session high was 12,844. Alcoa, Bank of America (BAC) , JPMorgan Chase (JPM) , Cisco(CSCO) and Verizon(VZ) were the biggest percentage gainers among the blue chips.
Advancers also far outnumbered decliners on both major U.S. exchanges, 2428 to 645 on the New York Stock Exchange, and 1964 to 549 on the Nasdaq.
Stocks sustained deep losses Tuesday with eurozone worries flaring up amid growing trepidation over Spain's economic stability.
"The market was ripe for a pullback and we got it," says Peter Cardillo, chief market economist at Rockwell Global Capital, earlier in the morning. "A close above some of the key technical levels, with the S&P at 1373-1374, would probably mean that the market will begin to focus more on earnings and that the pullback will be short-lived."
While the S&P 500 failed to break past those levels, the Nasdaq did manage to close above the psychological mark of 3,000.
Shares of Alcoa rose 6.2% Wednesday after the aluminum giant reported a surprise quarterly profit after the markets closed Tuesday. The first Dow component to report its results each quarter, Alcoa said it earned $94 million, or 10 cents a share, on revenue of $6.01 billion in the first three months of 2012. The average estimate of analysts polled by Thomson Reuters was for a loss of 4 cents a share on revenue of $5.77 billion.
The company attributed the better-than-expected results to "strong productivity improvements across all businesses, higher realized prices for aluminum, and improved volume and mix." Alcoa also reaffirmed its outlook for 7% growth in global aluminum demand in 2012.
Bank of America gained nearly 4% to $8.86. Guggenheim Securities analyst Marty Mosby upgraded the stock to buy from neutral. In his report, the analyst argued that shares "have traded down 15%, since peaking at $10 following the company's successful result from the Federal Reserve's annual stress tests in March, creating "a 29% upside potential to our price target, which we believe, even with BAC's heightened risk profile, justifies a buy rating."