US stocks: Markets end sharply higher

NEW YORK - US stocks rallied on the anniversary of the October 1987 crash with the S&P 500 closing on Wednesday with its largest point gain in almost six months.

Profit reports from companies including Dow component JP Morgan Chase & Co. pointed to strong quarterly earnings.

The blue-chip Dow Jones industrial average jumped more than 100 points, finishing Wednesday's session up 1.25 per cent -- in contrast to its drop of more than 22 per cent on Oct. 19, 1987.

Lower crude prices also boosted the market. The Nasdaq ended with its biggest point gain in more than three months, while the Dow average had its biggest point gain in about one month.

JP Morgan, the third-largest US banking company, said its quarterly earnings rose and its revenue topped Wall Street forecasts. JP Morgan's shares rose 2.8 per cent to $34.73 on the New York Stock Exchange.

"It looks like yet again we're going to get a quarter with higher-than-expected earnings," said Brian Gendreau, investment strategist at ING Investment Management. "Earnings guidance has been positive, and that always helps."

The Dow Jones industrial average gained 128.87 points, or 1.25 per cent, to end at 10,414.13. The Standard & Poor's 500 Index rose 17.62 points, or 1.50 per cent, to finish at 1,195.76. The technology-laced Nasdaq Composite Index climbed 35.24 points, or 1.71 per cent, to end at 2,091.24.

On the earnings front, Bank of America Corp., the No. 2 US bank, also said its quarterly profit rose more than expected. Its stock gained 2.1 per cent to $42.44, also on the NYSE.

Motorola Inc., the world's No. 2 mobile phone maker, said late on Tuesday that its third-quarter earnings rose on strong sales of its mobile phones, beating Wall Street estimates. Motorola shares climbed 4.2 per cent to $21.02 on the NYSE.

Also providing relief to investors were crude oil prices, which ended the day lower and were well off a high of $70.85 a barrel hit in late August, Gendreau said.

US crude oil for November delivery fell 79 cents to settle at $62.41 a barrel after a report showed crude oil inventories rose more than expected.

Energy prices

Cleveland Fed President Sandra Pianalto, who is not a voting member of the Fed's policy-setting committee this year, said higher energy prices did indeed risk spilling into core inflation.

But she said inflation should still slow next year, provided the Fed does its job. Pianalto was one of four Fed officials speaking after 1600 GMT about the US economy.

The Federal Reserve's "beige book" report showed business activity increased across the country in September and early October.

"I think that fears of inflation are overblown, and that when we consider energy prices have pulled back a bit, there doesn't seem to be a lot of evidence that inflation has propagated in the economy beyond energy," said Edward Keon, chief investment strategist at Prudential Equity Group.

The Fed has raised interest rates 11 straight times since June 30, 2004, in an attempt to control inflation.

Helping to lift the Nasdaq was Yahoo Inc. The world's largest internet media company on Tuesday reported a flat quarterly net profit that nonetheless topped Wall Street expectations as revenue surged from search and branded ads. Its shares surged 6.6 per cent, or $2.21, to $35.91 on Nasdaq.

United Technologies Corp.'s stock climbed 3.9 per cent, or $1.93, to $51.88 and was the biggest positive influence on the blue-chip Dow average. The industrial conglomerate, which makes Carrier air conditioners and Otis elevators, on Tuesday reported an increase in quarterly profit and raised its full-year outlook.

Stocks began the day lower, dragged down by chip maker Intel Corp., whose stock fell a day after the company said supply constraints were crimping the outlook for revenue. Shares of Intel slipped 3 cents to $23.69 on the Nasdaq.

Among other big companies reporting earnings on Wednesday was Honeywell International. Its stock shed 5.2 per cent, or $1.88, to $34.05 on the NYSE and was the biggest drag on the Dow after the industrial and aerospace conglomerate reported revenue that was below the average forecast.

Trading was heavy, with 2.06 billion shares changing hands on the New York Stock Exchange, well above the 1.46 billion daily average for last year. About 1.94 billion shares were traded on Nasdaq, above the 1.81 billion daily average last year.

The number of advancing stocks outnumbered those declining by about 2 to 1 on the New York Stock Exchange. On Nasdaq, advancing issues beat declining issues also by about 2 to 1.

- REUTERS