U.S. Stocks Surge As Fed Rate Decision Nears
NEW YORK (MarketWatch) -- U.S. stocks on Tuesday blasted higher, fueled by better-than-anticipated earnings from Goldman Sachs Group Inc. and Lehman Brothers Holdings Inc., as well as thinking a large Federal Reserve interest-rate cut would come later in the day.
"Expectations are across the board, but the consensus is settling on a 75 basis-point reduction in the fed funds target rate," said Kevin Giddis, fixed-income analyst at Morgan Keegan & Co.
The Fed's decision is expected at 2:15 p.m., Eastern.
The Dow Jones Industrial Average rose 268.74 points in late morning trade to 12,240.99, with all 30 of its components posting gains in a cross-sector climb.
Blue-chip financials gained as investors looked to the Fed to trim its benchmark rate to help offset credit-related losses.
Citigroup Inc. was recently up 8%, while J.P. Morgan Chase & Cos. rose 5.7%.
Other blue-chip stand-outs included General Motors Corp. , up 5.7%, and pharmaceutical conglomerate Merck & Co. Inc. , recently ahead 1.6%.
Off the Dow, shares of Goldman and Lehman both gained, with Goldman up 17.9% and Lehman advancing 31%. The large investment firms reported before market open that their respective profits fell less than analysts had forecast.
And, shares of Bear Stearns Cos. advanced more than 40% after some shareholders said they would vote against a fire-sale deal to sell the company to rival J.P. Morgan for $2 a share. .
Another Dow component, Exxon Mobil Corp. jumped 1.8% as crude-oil futures gained ground after Monday's slide, with the spot month for crude recently up $1.39 at $107.07 a barrel on the New York Mercantile Exchange.
The S&P 500 climbed 31.42 points to 1,308.02, while the technology-laden Nasdaq Composite gained 46.35 points to 2,223.36.
Helping support the tech sector, shares of Yahoo Inc. advanced 5.2% after the Internet giant reaffirmed its belief that future growth is ahead and that Microsoft Corp. is grossly underestimating its value in offering $31 a share for Yahoo. .
Volume on the New York Stock Exchange surpassed 475 million shares, and for every stock on the decline three were on the rise. On the Nasdaq, 256 million shares were exchanged, and advancing stocks outran those declining 4 to 1.
Economic data ahead of the opening bell pointed to further escalation in wholesale prices, which climbed 0.3% in February after a 1% rise the month before. .
A separate report pointed to a bigger-than-anticipated decline in new home construction, offering another glimpse into the embattled housing sector. .
By Kate Gibson