Strong earnings take Wall Street to sixth straight gain

08:42, July 14, 2010      

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Wall Street extended its rally to the sixth straight day on Tuesday as better-than-expected corporate results boosted investors' confidence for a strong earning season.

Alcoa, the first Dow component company reporting second-quarter results, said after the market closed on Monday that its net income was 136 million dollars, or 13 cents a share, compared with a loss of 454 million dollars, or 47 cents a share, in the same quarter last year. Revenue rose 22 percent to 5.2 billion dollars, higher than analysts' estimate.

Meanwhile, the aluminum producer also raised its 2010 projection for aluminum consumption from 10 percent to 12 percent "based on this improved end-market demand."

The strong kick-off of the new earnings season painted a brighter picture for the U.S. economy, soothing the nerves for investors who were rattled lately by a string of downbeat macroeconomic news.

Investors shrugged off a downbeat report from the Commerce Department which showed the U.S. trade deficit unexpectedly widened in May to its highest level in a year and a half.

News from Europe also drew attention in the market, as Moody's Investors Service cut the credit rating of Portugal by two notches to A1 on prospects for weak economic growth and a growing debt burden after the government allowed its budget deficit to balloon.

However, earnings were apparently the biggest issue among investors. They are focusing not only on the performance of the companies during the April-June period, but also the companies' forecasts for the coming quarters. What's more important, investors want to see whether sluggish retail sales, waning consumer confidence and high unemployment have actually hurt corporate profits.

Intel didn't disappoint them. The chip giant posted a 34- percent jump in revenue and issued an upbeat sales forecast after the closing bell on Tuesday, stating that "strong demand from corporate customers for our most advanced microprocessors helped Intel achieve the best quarter in the company's 42-year history." Intel's shares soared as much as 6 percent in post-market trading.

The Dow Jones industrial average rallied 146.75 points, or 1.44 percent, to 10,363.02. The Standard & Poor's 500 index jumped 16. 59 points, or 1.54 percent, to 1,095.34 while the Nasdaq soared 43. 67 points, or 1.99 percent, to 2,242.03.



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