By Jonathan Cheng
NEW YORK (MarketWatch) -- U.S. stocks soared Wednesday, as a
positive outlook from the financial sector and a spate of strong
earnings from airlines helped investors move past the previous
day's bruising losses.
The Dow Jones Industrial Average (DJI) gained 132 points, or
1.2%, to 11,111, while the Standard & Poor's 500-stock index
(SPX) was higher by 13 points to 1,179 and the Nasdaq Composite
(RIXF) gained 22 points to 2,549.
Materials and energy stocks were the two best-performing
sectors, a day after both were clobbered by fears over Beijing's
attempts to slow the world's second-largest economy. Cliffs Natural
Resources (CLF) added 3.7% and Freeport-McMoran Copper & Gold
(FCX) gained 2.6%, while Massey Energy Co. (MEE) jumped 5.4% after
reports the Richmond, Va., miner is exploring a potential sale of
the company.
Transport stocks also leapt, with the Dow Jones Transport
Average (DJT) gaining 2.1% after a trio of airlines reported strong
earnings.
Delta Air Lines (DAL) led the way, with shares jumping 10% after
the airline operator swung to a third-quarter profit and reporting
strong forward bookings through the holiday season.
American Airlines parent AMR Corp.'s (AMR) shares surged 11%
after the operator's first profit in two years, while US Airways
Group (LCC) gained 7.5% on strong earnings. JetBlue (JBLU) and
United Continental (UAL) rode the wave of optimism, picking up 7.8%
and 7.2% respectively.
"People are getting confident that earnings are going to be good
this year," said Maris Ogg, president of Tower Bridge Advisors.
"Maybe not to the level where we have 75% or 80% of companies
beating expectations, but people are more confident the economy is
on a more even keel."
Intel (INTC) and Boeing (BA) helped advance the broad-based
rally, which included all Dow's 30 components and all 10 sectors of
the S&P 500.
Even financial stocks joined in the rally, despite continuing
worries over mortgage foreclosures.
Morgan Stanley (MS) pared deep morning losses to trade flat
after the investment bank's net profit fell in the third quarter,
and Wells Fargo (WFC) shares gained 5% after the San Francisco bank
posted its best-ever quarterly earnings and made encouraging
remarks on the foreclosure issue.
Christian Thwaites, president and chief executive of Sentinel
Investments, said Tuesday's sharp decline -- triggered by China's
interest-rate hike and questions over U.S. banks' foreclosure
process -- was overdone.
"They're minor stories in a longer-term play," Thwaites said.
"It's a hiccup on sentiment, but it not's going to derail what the
market is trying to do."
Thwaites said he was encouraged by the good showing in energy
and materials stocks, arguing that expectations of Treasury
purchases by the Federal Reserve were pushing investors into
alternative currencies. "Being in energy stocks is protection
against that, and there's also going to be global demand to buoy
that," he said.