US stocks climbed broadly on Thursday following strong earnings from Caterpillar, 3M and United Parcel Service, while better-than-expected data on US existing-home sales and euro-zone economic activity also provided a boost.
The Dow Jones Industrial Average rose 201.77 points (1.99%) to 10,322.30, marking its biggest one-day gain since July 7 and its highest close since July 15. Boeing led the measure's gains with a jump of $3.42 (5.4%) to $66.60, after European rival aircraft manufacturer Airbus raised its order intake target for 2010.
Among the Dow's earnings reporters, 3M jumped $2.45 (3%) to $84.75, after the manufacturing giant posted a 43% jump in second-quarter earnings while its sales rebounded to levels last seen two years ago. AT&T added 59 cents (2.4%) to $25.51, after the telecommunications company reported a 26% increase in second-quarter earnings, benefiting from iPhone activations. Caterpillar climbed $1.13 (1.7%) to $68. The industrial giant posted a 91% surge in quarterly profit and boosted its full-year earnings outlook.
However, Travelers fell 58 cents (1.2%) to $49.29. Record claims costs from storms in the Midwest caused the insurer's second-quarter profit to fall 9.5%. The company also pared back the high end of its estimate for full-year earnings.
The Nasdaq Composite advanced 58.56 (2.68%) to 2,245.89. The Standard & Poor's 500 index gained 24.08 (2.25%) to 1,093.67. All of the S&P 500's sectors climbed, led by industrials, boosted by strong reports from UPS and Union Pacific in addition to the reports from 3M and Caterpillar.
UPS jumped $3.14 (5.2%) to $63.15, after the shipping giant posted a 90% surge in second-quarter profit on higher package volume, revenue growth and substantial margin improvement, and boosted its 2010 earnings guidance. Shares of rival FedEx climbed $4.50 (6.1%) to $78.53.
Meanwhile, Union Pacific climbed $3.28 (4.8%) to $72.40, as the railroad company's second-quarter earnings also topped analysts' expectations.
The gains followed encouraging economic data from the euro zone - its composite purchasing managers index and industrial orders both unexpectedly rose - as well as a smaller-than-expected drop in US existing-home sales.
In addition, investors found Thursday's round of data particularly encouraging because a number of bellwether companies posted revenue that topped analysts' estimates and climbed from the prior year, reversing a trend seen in recent days of companies missing revenue expectations even as their earnings beat estimates.
Netflix fell $16.09 (13%) to $103.56. The online video-rental company's second-quarter earnings climbed 34%, but subscriber-acquisition costs, a measurement closely watched by Netflix investors, rose 2.1%. In addition, Netflix said its earnings were likely to fall sequentially in the current quarter.
Xerox climbed 62 cents (7.4%) to $9.03. The printer-and-copier maker's second-quarter profit jumped 62% as sales improved across the board. The company also raised its 2010 earnings forecast and predicted a third-quarter profit in line with analysts' average estimate.
EBay added 77 cents (3.8%) to $20.94. The e-commerce operator's second-quarter earnings rose 26%, driven by continued strong performance at its PayPal unit as well as some improvements in its core Marketplace business.
Qualcomm jumped $2.95 (8.2%) to $39.11. The wireless-chip maker's fiscal third-quarter profit rose 4.1% as shipments of its mobile station modem chips increased 10% to a record 103 million units. The company boosted its year earnings forecast again.
Royal Caribbean Cruises climbed $2.98 (12%) to $27.56. The company recovered from a prior-year loss in the second quarter as the cruise operator trimmed costs and continued to see signs of a travel and tourism recovery. Royal Caribbean also raised its 2010 earnings guidance by a dime.
For Australian ADRs listed on the NYSE, BHP Billiton added $2.60 (3.81%) to US$70.90, Rio Tinto Plc strengthened $2.07 (4.26%) to US$50.61, ResMed increased $1.10 (1.74%) to US$64.29, Telstra Corporation climbed 44 cents (3.13%) to US$14.48, Telecom Corporation of NZ increased 17 cents (2.46%) to US$7.09 and Westpac rose $2.97 (3.05%) to US$100.50.
In economic news, US home sales tumbled by 5.1% to an annual rate of 5.37m in June as buyers shied away from big purchases. Separately, new unemployment claims rose more than expected, up by 37,000 to 464,000 in the week ended July 17.
At 7:45 AM (AEST), the 10-year Treasury note yield was 2.94% and the five year yield was 1.67%.
European shares ended with sharp gains on Thursday, boosted by unexpectedly upbeat euro-zone economic data and strong earnings results from a number of companies, including Swiss firm ABB Ltd.
The Stoxx Europe 600 index rallied 2.1% to 254.37. It had gained 1.1% over the past two sessions.
Rumours were circulating in the market that the results from the European bank stress tests may be released after the markets on the continent close, but there was no official confirmation of that speculation.
Results are scheduled to be released on Friday evening after European markets close, starting at 6pm Frankfurt time.
Banks with large exposure to peripheral European sovereign debt were notably higher on Thursday with BNP Paribas shares surging 4.8% and Credit Agricole shares up 5.6%, helping the French market to outperform. In Paris, the CAC-40 index rallied 3.1% to 3,600.57.
EADS shares rallied 5.9% after its Airbus plane-making unit lifted its full-year order target to more than 400 from about 300 after greater-than-expected demand at a commercial air show.
In the car sector, shares of Daimler jumped 2% and Renault rose 3.4%. The advance came as industrial orders in the euro zone grew a better-than-expected 3.8% in May, the Markit euro-zone composite purchasing managers index unexpectedly rose to 56.7 in July and UK retail sales were also better than forecast.
Of the major regional benchmarks, Germany's DAX index rose 2.5% to 6,142.15 and the UK FTSE 100 index advanced 1.9% to 5,313.81.
Earnings-related gainers in Europe included handset giant Nokia, whose shares gained 2.6%. Nokia reported a sharp drop in quarterly profit on Thursday as it continued to struggle in the market for high-end phones. Excluding one-time items, the company earned 11 European cents a share, in line with consensus estimates.
Swiss power and automation firm ABB rose over 4% after it reported second-quarter net profit that beat analyst forecasts.
Roche Holding shares ended up 1% after the Swiss drugmaker reported an 8% rise in adjusted first-half net income and confirmed its full-year outlook for 2010.
On the FTSE 100, Rio Tinto firmed 67.00 pence (2.06%) to 3,314.50 pence and BHP Billiton added 46.00 pence (2.4%) to 1,918.50 pence.
Asian shares ended mixed on Thursday as Federal Reserve Chairman Ben Bernanke's downbeat assessment of the US economic outlook spooked investors, sending Japanese stocks lower for a fifth straight session.
Japan's Nikkei Stock Average dropped 0.6%, China's Shanghai Composite Index added 1.1% and Hong Kong's Hang Seng Index edged up 0.5%
The New Zealand share market closed lower as offshore jitters about global economic recovery fuelled by Federal Reserve Chairman Ben Bernanke's comments worried investors. The NZX-50 ended down 0.7%, or 22.05 points lower, at 2,981.37 points.
Copper led a strong rally across the base metals on the London Metal Exchange, reaching a two-month high on fund buying and short-covering.
Aluminium rose $30 (1.50%) to $2,035 while copper firmed $125 (1.82%) to $6,975 and nickel added $750 (3.85%) to $20,225. Zinc strengthened $20 (1.05%) to $1,925 and lead gained $65 (3.49%) to $1,925. Comex copper was last quoted at 316.70 US cents per pound.
Gold staged a comeback, posting gains after bottom fishers came in to snap up the metal at bargain prices and as other commodities rallied on enthusiasm about US corporate earnings. Spot gold was last quoted at $1,194.65. Comex gold futures climbed $10.40 (0.88%) to $1,195.60. Spot silver was last quoted at $18.07.
Crude-oil soared nearly 4% as investors had high hopes a mostly upbeat slate of corporate results will translate into more energy demand and a tropical depression brewed in the Caribbean. West Texas Intermediate was last quoted at US$79.03 per barrel.
At 07:45 a.m. (AET) the US dollar was quoted at 0.7761 euros, 87.03 yen, 1.120 AUD and 65.57 pence.