* Apple’s stock scores best day since November 2008
* Fed keeps view on low rates; says stands ready to help
* Boeing up after earnings, Caterpillar slides
* Dow up 0.7 pct, S&P; up 1.4 pct, Nasdaq up 2.3 pct
By Caroline Valetkevitch
NEW YORK, April 25 (Reuters) – U.S. stocks rallied on
Wednesday, with Apple’s surge giving the Nasdaq its biggest
gain of the year, while the Fed chairman reassured markets that
the central bank would do more if necessary to lift the economy.
Apple fueled optimism that the current earnings season
would be much stronger than expected, generating gains across
all market sectors. Quarterly profits at Apple nearly doubled,
while its revenue easily topped expectations. The rally in
Apple’s stock especially benefited the S&P; 500 tech sector index
. It jumped 3.2 percent.
Federal Reserve Chairman Ben Bernanke spurred further gains
when he said the U.S. central bank “would not hesitate” to
launch another round of bond purchases to drive borrowing costs
lower if it looked like the economy needed it.
Shares of Apple, which has the world’s biggest
market capitalization, jumped 8.9 percent to $610. The stock had
its best day since November 2008 and hit a session high at $618.
Apple’s results boosted S&P; 500 companies’ earnings growth
to an estimated 6.9 percent for the first quarter, up from an
estimate of 4.6 percent before Apple, according to Thomson
Reuters data.
Apple’s stock had sold off recently, partly on fears that
its earnings could disappoint.
“It was a big relief” to many investors, said Giri
Cherukuri, head trader at OakBrook Investments LLC in Lisle,
Illinois, referring to Apple’s results. “There were a lot of
worries going into that earnings report. I think people were
worried iPhone growth was going to slow, and it was the same
thing with iPad growth.
“What they didn’t take into account was iPhone growth
throughout the world. That’s what the market didn’t see
properly.”
The Dow Jones industrial average shot up 89.16
points, or 0.69 percent, to 13,090.72 at the close. The Standard
& Poor’s 500 Index rose 18.72 points, or 1.36 percent, to
1,390.69. The Nasdaq Composite Index jumped 68.03
points, or 2.30 percent, to 3,029.63, and scored its best daily
percentage gain since Dec. 20.
The earnings season so far has been stronger than expected.
With 200 of the S&P; 500 companies reporting, three-fourths have
topped estimates, according to Thomson Reuters data.
Giving the Dow its biggest lift was Boeing Co. It
posted higher quarterly profit, helped by increased commercial
aircraft sales, and raised its earnings forecast for the year.
The stock shot up 5.3 percent to $77.08.
On the down side, Caterpillar Inc shares dropped 4.6
percent to $103.44 after it said profit rose 29 percent. But
the heavy equipment maker stoked Wall Street’s fears about
emerging markets by repeatedly citing slowdowns in economic
growth in China and Brazil.
Bernanke’s comments were a welcome surprise to some stock
investors.
“People looked at the FOMC statement and saw no mention of
QE3, but in his press conference, Bernanke made it quite clear
that additional asset purchases remain completely on the table.
That may have been a revelation to some of the earlier sellers,”
said William O’Donnell, managing director and head of U.S.
Treasury strategy at RBS Securities in Stamford, Connecticut.
The Dow Jones Transportation Average ended up 0.9
percent, despite the day’s downbeat economic data. Investors
often watch the transportation average as an indicator of the
stock market’s future direction.
March durable goods orders fell 4.2 percent in the biggest
drop in three years. The report was the latest to show softness
in U.S. economic data.
Volume was 6.8 billion shares on the New York Stock
Exchange, the Nasdaq and the NYSE Amex, compared with the daily
average this year of 6.77 billion.
