Dow up 89 as Alcoa, homebuilders boost stocks

Updated: 7:15 p.m. ET

The year's worst slump for stocks ended today, thanks to better-than-expected​ results from aluminum giant Alcoa (AA).

The aluminum giant's surprise first-quarter profit, reported late Tuesday, cheered investors and may have blown up the conventional wisdom that the first-quarter earnings season will be awful. The company reported a 69.5% drop in profit, but most analysts were expecting a loss.

Add to that a rebound in European stocks after French and German officials said selling in Spanish bonds was overdone. Then, toss in a Wells Fargo report saying homebuilders in 20 markets are seeing their strongest sales rates since the bank started surveying builders in 2001.

In addition, the Federal Reserve's Beige Book report suggested that the economy is growing modestly to moderately. But the report repeatedly said higher gasoline costs were a big concern -- a worry that may contributed to the market's finishing off its highs of the day.

The Dow Jones industrials ($INDU) closed up 89 points to 12,805, their first gain after five straight losses. The last was Tuesday's 214-point whopper, their biggest loss of the year and largest since Nov. 23. The Standard & Poor's 500 Index ($INX) gained 10 points to 1,369, also its first gain after five down days. The Nasdaq Composite Index ($COMPX) rose 25 points to 3,016.

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The Nasdaq-100 Index ($NDX), which tracks the largest Nasdaq stocks, was up 13 points to 2,708, thanks in part to strength in Intel (INTC), Cisco Systems (CSCO, Google (GOOG) and Starbucks (SBUX). Apple subtracted a point from the index.

Admittedly, the major indexes finished off their highs; the Dow had been up as many as 129 points in the morning and nearly that much in the afternoon. But the gains faded after the Beige Book report came out with its concerns about the effect of gas prices on consumer spending.

Google, which reports first-quarter results after Thursday's close, ran into selling pressure as soon as it hit $636. It finished at $635.96, up $9.10. 

Apple (AAPL) opened at $636.20, up nearly $8, but dropped back to $626.20, down $2.24, after the Justice Department filed a civil antitrust suit charging that the computer maker and book publishers were colluding on electronic book prices

Crude oil up; natural gas closes below $2
Crude oil (-CL) settled up $1.68 to $102.70 a barrel on an Energy Department report showing a decline in domestic supplies. Brent crude, the benchmark North Sea crude was up 19 cents to $120.07 a barrel. The markets watch the weekly supply reports closely, but they're at odds with each other. Tuesday's supply report from the American Petroleum Institute showed supplies were rising.

Natural gas (-NG), however, settled down 3 cents to $1.984 per million British thermal units as the industry tries to cope with a glut of domestic gas supplies. It was the lowest close since 2002.

Natural-gas producers Anadarko Petroleum (APC), Devon Energy (DVN) and Chesapeake Energy (CHK) were all lower.

Gold (-GC) settled down 40 cents to $1,660.30 an ounce. Silver (-SI) was off 15.8 cents to $31.521 an ounce, and copper (-HG) was off 1.05 cents to $3.6395 a pound.

Steel stocks were higher, but gold stocks were lower. Newmont Mining (NEM) fell 97 cents to $48. Freeport-McMoRan Copper & Gold (FCX) fell 54 cents to $35.78.

Interest rates were higher, as stocks pulled cash away from less-risky bonds. The 10-year Treasury yield rose to 2.028% from 1.988% on Tuesday. The dollar was lower against major currencies, especially the euro.

On Thursday, the Labor Department will report on weekly jobless claims and issue its March Producer Price Index report. This may prove relatively benign. Oil prices fell in March, although wholesale gasoline prices were higher. Nomura Securities is expecting a 0.3% gain in the index, 0.2% once energy is taken out.

The big earnings report comes from Google, expected to report earnings of $9.65 a share on revenue of $8.1 billion once payments to advertisers are deducted. That would be up from $8.08 a share on revenue of $6.54 billion a year ago.

Also reporting: Fastenal (FAST) and J.B. Hunt Transport Services (JBHT).

Futures trading suggests stocks will open modestly higher.

Energy prices -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Crude oil (-CL)			$102.70			$101.02			-0.31%			3.92%
(per barrel)
Heating oil (-HO)			$3.1149			$3.0957			-1.74%			6.89%
(per gallon)
Natural gas (-NG)			$1.9840			$2.0310			-6.68%			-33.62%
(per mil. BTU)
Unleaded gasoline (-RB)			$3.2955			$3.2496			-0.38%			24.01%
(per gallon)
Brent crude			$120.18			$119.88			-2.20%			11.92%
(per barrel)
Retail gasoline			$3.9150			$3.9220			-0.25%			19.51%
(per gallon; AAA)

Alcoa begs to differ
Alcoa, up 58 cents to $9.90, was the top performer among the 30 Dow stocks and fourth-best among S&P 500 stocks. The shares bounced as high as $10.15 because the company said business was better than anyone expected. Analysts had expected a loss of 4 cents a share because they worried about the global economy slowing.

The company earned 9 cents a share on revenue of $6 billion. Earnings were down from 27 cents a year but up from a fourth-quarter loss of 18 cents. Revenue was up about 1%.

Alcoa said it saw strength in its industrial products, automotive, aerospace, packaging and commercial transportation markets. It raised its global growth forecast for the aerospace market by three percentage points to 13% to 14%. Automotive growth should be in the range off 3% to 7%, driven by strength in North American markets.

It sees aluminum supply deficits all year, Europe notwithstanding, and sees global demand for aluminum growing 7% this year on top of 11% growth in 2011.

Alumina supplies are a different matter. Most analysts see a global surplus, and operating income fell to $35 million from $142 million a year ago. Alumina is an intermediate product that comes from early processing of bauxite ores. It then is refined into aluminum.

Several analysts boosted their earnings estimates for the company today. Among them: Anthony Rizzuto, who now sees the company earning 50 cents a share this year, up from an early 40-cent estimate.

Fed's Beige Book sees modest hiring, little inflation
The Federal Reserve's Beige Book report suggested that hiring was steady or growing modestly across much of the country. Where there's a real shortage, the report said, was in "high-skilled positions."

The report, compiled by staffs at the 12 Federal Reserve banks, said, however, there was little upward pressure on wages but some pressure on health care costs.

The report called out continued strength in manufacturing, particularly in the auto industry and in high technology. The Kansas City Fed reported a shortage of skilled petroleum geologists and engineers to work in oil fields in North Dakota and elsewhere.

Consumer spending was stronger, with auto dealers reporting stronger sales.

While residential real estate activity was showing some strength, the San Francisco and Cleveland reports showed activity "lackluster or at low levels." The San Francisco District includes some of the priciest markets in the country and markets like Las Vegas and Phoenix, which were battered by the housing bust. The Cleveland District includes Detroit and other rust-belt markets.

The constant theme throughout the report was when high gasoline prices would depress activity.

Life in the housing market?
The February numbers for housing weren't much to write home about. But a Wells Fargo survey suggests the spring selling season is going fairly well.

Wells Fargo is a cheerleader for residential real estate. It is one of the nation's largest real estate lenders. That said, the banking giant surveys sales managers for builders in 20 markets. About 63% reported better-than-expected​ orders, the highest since the survey began in 2001.

The report pushed builder stocks sharply higher; the group was the market's best performer today.

PulteGroup (PHM) jumped 70 cents to $8.39 and was the top percentage gainer among S&P 500 stocks. NVR (NVR) added $19.01 to $742.70. D.R. Horton (DHI) rose 68 cents to $14.73.

Leaders and laggards
Mattress Firm Holding (MFRM) jumped $6.57 to $44. It had hit $44.45, its highest intraday price since going public in November. The mattress retailer forecast earnings for the current fiscal year will be at least $1.40 a share, beating the average analyst estimate of $1.37.

Nokia (NOK) slid 79 cents to $4.24 in New York after reaching as low as $4.20, its lowest intraday price since 1998. The mobile phone maker, which is a year into an alliance with Microsoft (MSFT) to try to win back market share lost to Apple, cut its profit forecast for its handset division. (Microsoft publishes MSN Money.)

Owens-Illinois (OI) rose $1.51 to $23.52. The big manufacturer of glass bottles said first-quarter earnings will rise more than 35% from a year earlier on good manufacturing performance and greater-than-planned​ production rates.

Computer Sciences (CSC) fell 79 cents to $27.39. The technology contractor for governments and companies said earnings excluding one-time charges in its fiscal fourth quarter, which ended on March 30, were 19 to 21 cents a share. Analysts have been predicting 97 cents.

F5 Networks (FFIV) slipped $5.65 to $122.65.  The software maker's sales force had "an unusually strong push" toward the end of the quarter, analysts at William Blair & Co. said in a note.

Twenty-four of the 30 Dow stocks were higher, along with 420 S&P 500 stocks and 82 Nasdaq-100 stocks.

Alcoa, Bank of America (BAC) and JPMorgan Chase (JPM)led the Dow. Chevron (CVX) and Microsoft (MSFT) were the laggards. 
 
Pulte, Owens-Illinois and Supervalu (SVU) led the S&P 500, withF5 Networks and Range Resources (RRC) the laggards.

First Solar and Starbucks (SBUX) were the Nasdaq-100 leaders, with F5 Networks and Randgold Resources (GOLD) the laggards.

Short hits from the markets -- New York close
			Wed.			Tues.			Month chg.			YTD chg.
Treasury yields
13-week Treasury bill			0.0900%			0.080%			28.57%			800.00%
5-year Treasury note			0.878%			0.854%			-15.82%			5.78%
10-year Treasury note			2.028%			1.988%			-8.48%			8.39%
30-year Treasury bond			3.185%			3.136%			-4.78%			10.25%
Currencies
U.S. Dollar Index			79.993			80.098			1.08%			-0.66%
British pound			1.5918			1.5868			-0.57%			2.45%
(in U.S. $)
U.S. $ in pounds			£0.628			£0.630			0.57%			-2.39%
Euro in dollars			$1.31			$1.31			-1.63%			1.31%
(in U.S. $)
U.S. $ in euros			€ 0.762			€ 0.764			1.65%			-1.30%
U.S. $ in yen			81.10			80.72			-2.27%			5.19%
U.S. $ in Chinese			6.33			6.31			0.14%			0.05%
yuan
Canada dollar			$0.998			$0.996			-0.38%			1.78%
(in U.S. $)
U.S. dollar			$1.002			$1.004			0.39%			-1.74%
(in Canadian $)
Commodities
Gold (-GC)			$1,660.30			$1,660.70			-0.69%			5.97%
(per troy ounce)
Copper (-HG)			$3.6395			$3.650			-4.85%			5.92%
(per pound)
Silver (-SI)			$31.521			$31.679			-2.96%			12.92%
(per troy ounce)
Wheat (-ZW)			$6.280			$6.2575			-4.96%			-3.79%
(per bushel)
Corn (-ZC)			$6.360			$6.348			-1.24%			-1.62%
(per bushel)
Cotton			$0.8830			0.8826			-5.98%			-3.69%
(per pound)
Coffee			$1.8265			1.8045			-1.27%			-20.47%
(per pound)
Crude oil (-CL)			$102.70			$101.02			-0.31%			3.92%
(per barrel)