US stocks shot higher on Tuesday, extending the recent winning streak to six sessions as better-than-expected earnings from Alcoa and CSX boosted expectations for upcoming reports from bellwethers like Caterpillar.
The Dow Jones Industrial Average climbed 146.75 points (1.44%) to 10,363.02. Caterpillar, which reports results on July 22, was the measure's best performer, rising $2.51 (3.9%) to $66.79.
Alcoa rose 13 cents (1.2%) to $11, after the aluminium giant swung to a second-quarter profit. The company reported a pick-up in demand in almost every one of its markets, suggesting a possible improvement in the manufacturing sector.Intel closed up 44 cents (2.1%) to $21.01, ahead of its second-quarter report. The chip giant then posted earnings well above analysts' estimates, and raised its outlook for 2010 gross margin to 66% from 64%. The stock rose 4.8% in after-hours trading.
The Nasdaq Composite rose 43.67 (1.99%) to 2,242.03. The Standard & Poor's 500 index advanced 16.59 (1.54%) to 1,095.34, with all of its sectors in the black.
The gains came as the report from Intel, as well as results from railroad-operator CSX and others, started the second-quarter earnings season on a positive note. CSX's profit jumped 47% on higher revenue due to volume gains across all major markets. However, CSX slid 74 cents (1.4%) to $51.72, as the company's chief executive said it has "seen some increase in activity" in rate challenges.
American International Group rose $2.42 (6.8%) to $37.99, after the insurance company's biggest private shareholder, Bruce Berkowitz, made his stake even bigger, according to a filing with the Securities and Exchange Commission. The filing shows Berkowitz's Fairholme Capital Management now holds a 24% stake, up from 19%. Berkowitz also disclosed an 11% stake in bond insurer MBIA, which prompted the company's stock to climb 74 cents (12%) to $7.17.
Chevron climbed $1.38 (1.9%) to $73.23, after the energy giant said it expects second-quarter profit to be above the previous quarter, driven by significantly higher earnings from its refining and sales operations due to stronger refining margins and the stronger dollar. The company also said in an interim update that earnings in its production and exploration operations will be in line with its first quarter.
Apple declined $5.49 (2.1%) to $251.80, as negative chatter spread about reception problems plaguing the company's iPhone 4. On Monday, Consumer Reports issued a statement saying it could not recommend the iPhone 4 for purchase. The chorus of complaints seemed to grow louder on Tuesday, as a columnist for CNet, another popular review site for high-tech gadgets, recommended that Apple recall the device.
American depositary shares of Infosys Technologies fell $3.59 (5.7%) to $59.43. The software services company reported a 2.4% drop in its first-quarter net profit, missing analysts' expectations.
Invesco added $1.18 (6.5%) to $19.43. The global asset manager reported a 24% increase in assets under management in June from May, aided by the acquisition of Morgan Stanley's retail business.
For Australian ADRs listed on the NYSE, BHP Billiton increased 94 cents (1.42%) to US$67.22, Rio Tinto Plc rose 66 cents (1.41%) to US$47.55, ResMed strengthened 88 cents (1.35%) to US$66.23, Telstra Corporation advanced 33 cents (2.35%) to US$14.38, Telecom Corporation of NZ increased 12 cents (1.73%) to US$7.06 and Westpac improved $2.63 (2.71%) to US$99.60.
In economic news, the US trade deficit widened by 4.8% to $42.27bn in May, above economists expectations of $38.9bn and the highest level in a year and a half, as a surge in imports from China more than offset the impact of falling oil prices.
Small businesses continue to feel highly pessimistic about the US economic outlook, according to a report from the NFIB, whose Small Business Optimism Index dropped 3.2 points to 89.0 last month, more than erasing a modest 1.6-point gain in May.
At 7:45 AM (AEST), the 10-year Treasury note yield was 3.12% and the five year yield was 1.89%.
European shares ended with strong gains on Tuesday, rising after Alcoa got the US second-quarter earnings season off to a good start and BMW hiked its earnings outlook.
The Stoxx Europe 600 index rose 1.9% to finish at 255.99, its sixth consecutive daily rise.
Banks rallied, with Deutsche Bank gaining 2.8%, Credit Agricole rising 3.7% and Barclays gaining 4.2%.
Greek banks gained ground after the Greek government on Tuesday managed to sell EUR1.625bn of 26-week bills in its first move into the debt market since tapping a joint European Union-International Monetary Fund rescue plan.
National Bank of Greece shares rose 4% and the Greek ASE Composite index jumped 2.6% to 1,567.48.
However, Portugal's PSI 20 index rose just 0.1% to 7,312.59, lagging much of the rest of Europe, after Moody's Investor Service downgrading Portugal's bond ratings two notches to A1 from Aa2 earlier in the session.
Of the major regional benchmarks, the UK FTSE 100 index rose 2% to close at 5,271.02, the French CAC-40 index rose 2% to settle at 3,637.76 and the German DAX index finished 1.9% higher at 6,191.13.
Stocks that are more sensitive to economic growth gained ground in Europe, with steelmaker ThyssenKrupp up 3.5%.
Results from German carmaker BMW also helped the gains, with the firm's shares surging 8.3% after it hiked its 2010 and second-quarter earnings view. "For the full year, the company expects sales volumes to rise by around 10% to more than 1.4m units. In addition to the recovery of the worldwide markets, strong demand for new models such as the BMW 5 Series and BMW X1 has had a positive impact on the business development," the carmaker said. Other auto shares also gained, with Daimler rising 5.4% and Volkswagen gaining 5.2%.
Ubisoft Entertainment shares vaulted 15.4% after it said sales in the fiscal first-quarter ending June 30 climbed 93% to EUR160m, which topped its previous guidance of EUR145m. The video games maker cited the performance of Splinter Cell Conviction, a good performance by back catalogue and casual titles, and favourable exchange rates. It projects second quarter sales around EUR83m, and it still expects "profitable growth and positive cash flow from operating activities."
On the FTSE 100, Rio Tinto climbed 32.50 pence (1.05%) to 3,135.00 pence and BHP Billiton increased 31.00 pence (1.7%) to 1,856.00 pence.
Asian benchmarks erased early gains on Tuesday to end mixed, dragged lower by losses in Chinese shares after Beijing dashed hopes that it would relax its tightening policies on the property market.
China's Shanghai Composite index ended down 1.6%, Hong Kong's Hang Seng index lost 0.2% and Japan's Nikkei Stock Average ended down 0.1%.
New Zealand shares closed flat in anaemic trade due to a lack of corporate news and with most market participants away for the school holiday period. The NZX-50 index closed down 0.1%, or 3.1 points, at 3,008.90.
Base metals on the London Metal Exchange closed higher, tracking a rally in equities and a weaker US dollar, but analysts said lower volumes and macroeconomic concerns are likely to lead to continued volatility in the days ahead. Aluminium rose $20 (1.01%) to $1,995 while copper firmed $10 (0.15%) to $6,665 and nickel added $325 (1.70%) to $19,475. Zinc fell $5 (0.27%) to $1,855 and lead strengthened $30 (1.67%) to $1,825. Comex copper was last quoted at 304.00 US cents per pound.
Gold futures rose in a rally with other commodities on improving economic sentiment at the onset of US corporate earnings season. Spot gold was last quoted at $1,211.85. Comex gold futures improved $14.80 (1.23%) to $1,213.50. Spot silver was last quoted at $18.20.
Crude settled higher bouncing off Monday's decline on encouraging economic signals and expectations upcoming data will show US oil inventories have declined. West Texas Intermediate was last quoted at US$77.15 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.7857 euros, 88.64 yen, 1.133 AUD and 65.89 pence.