Dow jumps 194, but IBM, Intel results disappoint

Updated: 10:15 p.m. ET

Stocks surged today in their best rally since mid-March as worries about Spain eased and the International Monetary Fund raised its global growth forecast for the first time in a year. The rally was the second in a row. 

The Dow Jones industrials ($INDU) just missed closing with a 200-point gain and moved above 13,000 for the first time since April 5, and the Nasdaq Composite Index ($COMPX) moved back above 3,000 as it enjoyed its biggest point gain since December.

But first-quarter earnings disappointments from IBM (IBM) and Intel (INTC) may weigh on markets on Wednesday. Yahoo (YHOO) shares were higher after hours as results beat estimates.

Meanwhile, investors were cheered from Coca-Cola (KO). Apple (AAPL) topped $600 after five straight losses.

The Dow closed up 194 points to 13,116, with IBM contributing 34 points of the gain. The blue chips had been up as many as 210 points. The Standard & Poor's 500 Index ($INX) added 21 points to 1,391, and the Nasdaq was up 54 points to 3,043. The Nasdaq-100 Index ($NDX) was up 53 points to 2,724. Apple, up $29.57 to $609.70, contributed more than 25 points to the index's gain.

 

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At the same time, the market shrugged off a report showing no change in industrial production and a surprising drop in housing starts for March. Building permits in March, however, were up 4.5% from February and were at their highest level since October 2008.

The Dow, S&P 500 had their best daily point gains since March 13. The Nasdaq's gain was its best since a 55-point gain on March 26.

Compared with the first quarter, April is proving to be a very volatile month. The Dow has moved up or down 100 points or more six times this month, compared with six in all of the first quarter and four in April 2011.

Buffett has prostate cancer
After the close, Berkshire Hathaway (BRK.A) disclosed that CEO Warren Buffett has been diagnosed with Stage 1 prostate cancer.

In a letter to shareholders, Buffett, 81, said his doctors told him the cancer is not life-threatening. He will start a two-month treatment regimen in mid-July. The cancer was discovered during a routine physical. Otherwise, Buffett said, "I feel great."

"I will let shareholders know immediately should my health situation change. Eventually, of course, it will; but I believe that day is a long way off," he said.

Berkshire Hathaway's Class A shares were off $1,810, or 1.5%, to $119,500 after hours after closing at $121,310, up $1,785, in regular trading.

The Class B shares, which have the ticker BRK.B, were off $1.14, or 1.4%, to $79.61. They'd finished at $80.76, up $1.09, in regular trading.

IBM misses Street estimates; Yahoo shares rise on earnings beat
After the close, IBM reported earnings of $2.61 a share on revenue of $24.7 billion, up from $2.31 in earnings and revenue of $24.6 billion a year ago. The Street had been looking for $2.65 a share in earnings and $24.8 billion in revenue. Shares were off $4.75, or 2.3% to $202.70 after hours. The stock had closed at $207.45, up $4.73, in regular trading.

Intel (INTC), the world's biggest chipmaker, earned 53 cents a share on revenue of $12.9 billion. Analysts had expected 50 cents a share in earnings and revenue of $12.84 billion. A year ago, the company 56 cents a share on revenue of $12.85 billion. A key question is how Intel views the personal computer industry, which has been struggling against tablet devices such as Apple's iPad. Intel has been struggling to sell chips to handset makers. Intel shares were down 89 cents, or 3.1%, to $27.58 after hours. They'd finished up 6 cents to $28.47 after hitting a 52-week high of $28.78.

Yahoo (YHOO) earned 23 cents a share on revenue of $1.08 billion after payments to advertisers (otherwise known as traffic acquisition costs). Analysts had expected 17 cents a share and revenue of $1.06 billion. A year ago, Yahoo earned 17 cents on revenue of $1.06 billion. Shares were up 44 cents, or 2.9%, to $15.45 after hours. The shares had closed up 23 cents to $15.01 in regular trading.

A higher open on Wednesday?

Futures trading suggests a higher open for stocks on Wednesday.

Earnings reports due Wednesday include results from Dow component American Express (AXP), eBay (EBAY), F5 Networks (FFIV), Halliburton (HAL), Marriott International (MAR) and Yum! Brands (YUM).

Economic reports include the weekly report on oil inventories and mortgage applications.

Rally helps crude oil move above $104
Crude oil (-CL) in New York rose $1.27 to $104.20 a barrel. Brent crude was off a penny to $118.67 a barrel. The reason is the expectation that the gap between crude in New York and Brent will narrow once the Seaway pipeline from Cushing, Okla., to the U.S. Gulf Coast opens in mid-May.

Natural gas (-NG) fell 6.5 cents to $1.951 per million British thermal units.

The retail price of gasoline dropped slightly to $3.904 a gallon from $3.907 on Monday, according to AAA's Daily Fuel Gauge Report.

Gold (-GC) settled up $1.40 to $1,651.10 an ounce. Copper (-HG) settled at $3.647 a pound, up $1.90 from Monday. Silver(-SI) added 30.1 cents to $31.674 an ounce.

Interest rates were higher, with the 10-year Treasury yield rising to 2.012% from 1.974% on Monday. The dollar was lower against major currencies, especially the euro.

Energy prices -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Crude oil (-CL)			$104.20			$102.93			1.15%			5.43%
(per barrel)
Heating oil (-HO)			$3.1266			$3.1166			-1.37%			7.29%
(per gallon)
Natural gas (-NG)			$1.9510			$2.0160			-8.23%			-34.73%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.2340			$3.2670			-2.24%			21.70%
(per gallon)
Brent crude			$118.78			$118.68			-3.34%			10.62%
(per barrel)
Retail gasoline			$3.9040			$3.9070			-0.54%			19.17%
(per gallon; AAA)

A broad rally -- but light volume
All 30 Dow stocks finished higher on the day, led by Walt Disney (DIS) and Kraft Foods (KFT), up $1.02 to $42.68 and 90 cents to $38.48, respectively. The laggard was Intel.

Meanwhile, 472 S&P 500 stocks were higher, led by First Solar (FSLR), up $2.14 to $22.96, and Netflix (NFLX), up $5.87 to $107.02. Whirlpool (WHR) and Avon Products (AVP) were the laggards.

And 92 Nasdaq-100 stocks were higher. Apple was the the third-best percentage gainer after First Solar and Netflix. The laggard was Seagate Technology (STX), down 61 cents to $27.89.

Volume was light again, only 691 million shares on the floor of the New York Stock Exchange. Nasdaq volumed came to $1.27 billion shares.

Growth is coming, but it's very fragile
The IMF increased its outlook for global growth in 2012 to 3.5% from 3.3% and lifted its forecast for the U.S. expansion to 2.1% from 1.8%. But the forecast was hardly bullish.

"For the last six months the world economy has been on what is best described as a roller-coaster," IMF chief economist Olivier Blanchard said at a briefing in Washington today. After European governments took measures to reassure markets, "an uneasy calm remains. One has the feeling that at any moment things could well get very bad again."

Countries such as Germany and France may manage to eke out growth, but Europe overall will continue to struggle as it deals with high sovereign debt, bank deleveraging efforts and low confidence. But the area’s economy will shrink 0.3% this year, the IMF said.

Meanwhile, Spain sold 12- and 18-month bills a day after yields on its 10-year bonds reached the highest level this year. The yield dropped back to 5.887% today. German’s ZEW survey of investor confidence unexpectedly rose to a two-year high.

Investors will be watching an auction of longer-term bonds on Thursday.

Coca-Cola results cheer
Coca-Cola said its first-quarter profit rose 8% to $2.05 billion, or 89 cents per share, beating analysts' expectations for a profit of 87 cents, according to Thomson Reuters. Revenue was $11.1 billion, topping forecasts for $10.82 billion. Shares rose $1.51 to $73.95.

Goldman Sachs' (GS) first-quarter earnings dropped from a year earlier, but results exceeded analysts' forecasts. The investment bank earned $2.1 billion, or $3.92 per share, compared to the average analysts' estimate of $3.55 a share. Shares slid 87 cents to to $116.86. Rival Morgan Stanley (MS), which reports first-quarter results on Thursday, was up 35 cents to $17.85.

Johnson & Johnson (JNJ) said its first-quarter profit rose 3% to $3.91 billion, or $1.41 a share. Excluding certain items the company earned $1.37 a share, more than the $1.35 analysts expected. However, the health care company reported revenue of $16.14 billion, falling short of expectations for $16.26 billion. Shares finished up 24 cents to $64.22. 

Starts fall, but permits suggest strength building

U.S. housing starts fell 5.8% in March on a seasonally adjusted basis. It was the second straight monthly decline and well below expectations for a 0.7% increase. But the number of new housing permits rose 4.5% last month, and reached their highest level since September 2008. Economists had forecast a modest decline.

On an unadjusted basis, however, starts for March were higher than either February or March. The same was true for building permits, which suggests stronger housing activity later this year.

The data may be distorted by the mild winter that boosted construction activity in January and February. But there is some wariness in the market. The National Association of Home Builders said Monday that, despite gains in traffic to builder showrooms, it's very difficult to get buyers to commit. So, builders have trimmed their outlooks a bit.

Nonetheless, homebuilding stocks were higher. PulteGroup (PHM) was up 22 cents to $8.65. The Philadelphia Housing Sector Index ($HGX) was up 1.86 to 123.35.

Separately, production at U.S. factories dropped in March for the first time in four months as the industry cooled following the strongest surge in three decades.

Manufacturing, which makes up about 75% of industrial output, decreased 0.2% last month as appliance and furniture makers cut back, data from the Federal Reserve showed today in Washington. The decline followed a revised 3.4% gain from December through February that marked the biggest three-month jump since March 1984.

Whirlpool's decline was in response to the report.

Short hits from the markets -- New York close
			Tues.			Mon.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0700%			0.070%			0.00%			600.00%
5-year Treasury note			0.863%			0.839%			-17.26%			3.98%
10-year Treasury note			2.009%			1.974%			-9.34%			7.38%
30-year Treasury bond			3.155%			3.114%			-5.68%			9.21%
Currencies
U.S. Dollar Index			79.627			80.055			0.62%			-1.11%
British pound			1.5941			1.5903			-0.43%			2.60%
(in U.S. $)
U.S. $ in pounds			£0.627			£0.629			0.43%			-2.53%
Euro in dollars			$1.31			$1.31			-1.56%			1.38%
(in U.S. $)
U.S. $ in euros			€ 0.761			€ 0.761			1.59%			-1.36%
U.S. $ in yen			81.10			80.44			-2.27%			5.19%
U.S. $ in Chinese			6.32			6.31			-0.04%			-0.13%
yuan
Canada dollar			$1.010			$1.001			0.82%			3.00%
(in U.S. $)
U.S. dollar			$0.990			$0.999			-0.80%			-2.91%
(in Canadian $)
Commodities
Gold (-GC)			$1,651.10			$1,649.70			-1.24%			5.38%
(per troy ounce)
Copper (-HG)			$3.647			$3.628			-4.65%			6.14%
(per pound)
Silver (-SI)			$31.3674			$31.3730			-3.44%			12.37%
(per troy ounce)
Wheat (-ZW)			$6.1550			$6.1625			-6.85%			-5.71%
(per bushel)
Corn (-ZC)			$6.1675			$6.233			-4.23%			-4.60%
(per bushel)
Cotton			$0.8825			0.8725			-6.04%			-3.74%
(per pound)
Coffee			$1.7470			1.7585			-5.57%			-23.93%
(per pound)
Crude oil (-CL)			$104.20			$102.93			1.15%			5.43%
(per barrel)