By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market hit an intraday
high, its first of the year, after Bank of America Corp. announced
an uptick in earnings and Apple Inc. reported a deal with China
Mobile Ltd., lifting sentiment ahead of the U.S. Federal Reserve's
release of regional economic data.
The S&P 500 index (SPX) rose 7.8 points, or 0.4%, to
1,846.70 and at one point hit a record intraday high. The benchmark
is trading near record levels reached on Dec. 31.
The Dow Jones Industrial Average(DJI) added 108 points, or 0.7%,
climbing to 16,482.07. The Nasdaq Composite(RIXF), the
best-performing index, rose 27 points, or 0.7%, to 4,209.45. The
tech-heavy index turned positive for the year after sharp gains on
Tuesday.
Follow the stock market live blog.
John Fox, director of research at Fenimore Asset Management,
says that markets have already priced in the possibility of the Fed
completing its taper by the end of the year, and that if it happens
early, it will have a minimal impact.
"The economy is improving, which means better corporate
earnings. We have created more than 2 million jobs and at 10-year
yield below 3%, markets can only go up. At current multiples,
markets will go up even if the 10-year yields rise to 3.5%, because
at a price-to-earnings ratio of 17.6, there is room for a bit more
expansion," Fox said.
Upbeat earnings results from Bank of America (BAC) drove gains
among the financials sector of the S&P 500. The bank's
fourth-quarter earnings topped analysts' expectations and shares
rose 2.4%. Read a recap of the live blog of Bank of America's
earnings call.
Apple Inc. (AAPL) shares rose 2.3% after the chairman of China
Mobile said the company's recent deal with Apple will entail broad
cooperation between the two. He also said millions of iPhones have
already been ordered by customers, signaling strong demand for the
device. Apple's Chief Executive Officer Tim Cook said he was
"incredibly optimistic" about the outcome of cooperating with the
Chinese carrier.
Stocks held on to gains after the Federal Reserve released a
report, known as the Beige Book, saying the U.S. economy is
continuing to grow at a moderate pace and the economic outlook is
positive, confirming recent economic indicators.
Earlier, the Federal Reserve Bank of New York's report showed
manufacturing activity in the New York region surged in January,
far more than anticipated, after three months of weak readings.
Separately, U.S. wholesale prices rose in December for the first
time in three months, largely reflecting higher costs for gasoline
and tobacco, the U.S. Department of Labor said. The gains were
higher than economists expected.
Jeffrey Kleintop, chief market strategist at LPL Financial,
wrote in a research note that the second-year curse may offer a
better indication as to how the year may unfold.
"Year two of the presidential cycle has typically been a
volatile one for investors. Will the year-two curse repeat in 2014?
It may, particularly if a temporary economic soft spot develops in
the second quarter. Weak economic data readings led to 5% or more
pullbacks beginning in the spring of each of the past four years,"
Kleintop wrote.
Shares of General Motors Co. (GM.XX) fell 1.5% after the auto
maker said it sees "modest" 2014 North American market-share gains,
but it also forecast restructuring costs of $1.1 billion for this
year. GM said after the market closed Tuesday that it would pay a
dividend this March, the first since May 2008.
Aeropostale Inc. (ARO) shares jumped 1.2%. The teen retailer has
reportedly reached out to at least two private-equity firms to
gauge interest in a sale, but isn't currently in negotiations,
according to Bloomberg News.
Shares of Tesla Motors Inc. (TSLA) rose 3.7%. The electric-car
company's shares surged 16% Tuesday after the company said its
fourth-quarter sales and deliveries came to "almost" 6,900, beating
its own expectations by 20%. The company also disclosed it would
recall up to 29,222 2013 Model S cars because of adapter
issues.
PetSmart Inc. (PETM) shares fell 2.2%. Joseph O'Leary, the
company's chief operating officer and president, is set to retire
this year and the company said Tuesday it won't fill the chief
operating officer position. Instead, the chief executive will take
on the additional title of president as the company reorganizes its
leadership structure.
In other markets, European stocks closed at a six-year high on
global growth hopes. The dollar strengthened across the board
Wednesday after U.S. data underscored a recovery in the
manufacturing sector.
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