Stocks Surge On Good News
The Dow Surged 256 points, NASDAQ up 64, and S&P gains over 30. Certainly an impressive day for major equities!
So, why the surge?
Well, according to the Mainstream media, Intel and JP Morgan both reported strong earnings and were the primary drivers of the rally. Intel was up 6% and JP Morgan gained 7% on the day.
So, what "specifically" was the good news for JP Morgan?
Let’s take a look:
JPMorgan Chase reported a 50 per cent drop in its first quarter profits as America's third biggest bank took a $5.1 billion (£2.5 billion) writedown against investments in mortgage-backed securities and its portfolio of homeloans.
The US investment bank, which last month bailed out former US rival Bear Stearns, said today that first quarter profits for the three months to March fell to $2.37 billion compared with $4.79 billion during the first quarter last year
Well that certainly wasn't “Good News”.
What about Intel?
Intel profit narrowed in the first quarter, but the chipmaker posted sales that were slightly ahead of Wall Street expectations and rebutted fears of a tech spending slowdown with a strong sales outlook for the current quarter…
That wasn’t bad news, but it certainly wasn’t good either.
Could something else be responsible for the dramatic rally today?
Lets peruse today's business news releases and find out…
April 16 (AFP) Oil prices streaked into new record territory for the second straight day Wednesday, boosted by a decline in US energy reserves and as the weakening dollar drew investments in commodities.
April 16 (Bloomberg) -- The dollar fell to a record low against the euro as European inflation accelerated last month. The currency had its biggest decline versus the euro in three weeks, weakening to $1.5979 as U.S. housing starts dropped more than twice as much as forecast to a 17-year low. The Canadian and Australian dollars and the Norwegian krone increased after crude oil touched a record $115.07 a barrel.
April 16 (Bloomberg) Housing starts in the U.S. dropped more than twice as much as forecast in March to a 17-year low, signaling that declining construction will keep eroding economic growth this year.
April 16 (CNN Money) SLM Corp. (SLM) swung to a first-quarter loss and warned it can't make profitable loans at this time, prompting the nation's largest student lender to assess its operation and call for a "system-wide liquidity solution."
5) Steep Loss at American Airlines Illustrates Industry’s Woes
The parent company of American Airlines, the AMR Corporation, posted a $328 million first-quarter loss as surging fuel prices sent the industry into a downturn.
6) Fed Beige Book Says Economy `Weakened' Since February (Update3)
April 16 (Bloomberg) -- The Federal Reserve said economic growth has slowed in nine of its 12 districts since February, hurt by ``anemic'' real estate markets and a slowdown in consumer spending.
The consumer price index figures for March weren't the runaway disaster many had feared, but that only shows how rough things have become, as the U.S. economy deals with the twin problems of inflation and a slowdown.
The Labor Department reported on Wednesday that the CPI, which measures the prices of a mix of consumer goods and services such as transportation, energy, food and medical care, inched higher in March after a flat reading in February.
April 16 (Forbes) U.S. Treasury Secretary Henry Paulson's blundering is becoming more breathtaking with each passing week… Until the Fed dumps inflation targeting and the U.S. abandons its weak-dollar policy, inflation will rule the day. Retain (and add to) your gold hedges.
Well, after reviewing the presses, I’m completely baffled... If today was a “good news day”, I’d certainly hate to see what a bad one looks like.
Please feel free to post your thoughts on this issue