Wall Street rises after five losing days, Alcoa soars

1 of 3. Traders work on the floor of the New York Stock Exchange April 11, 2012.

Credit: Reuters/Brendan McDermid

By Ryan Vlastelica

NEW YORK | Wed Apr 11, 2012 4:33pm EDT

NEW YORK (Reuters) - An encouraging start to earnings season helped stocks rebound on Wednesday from five days of losses that pushed the S&P 500 below a key technical level.

Equities cut gains late in the session after the Federal Reserve said rising energy costs were a concern for economic growth. Atlanta Fed President Dennis Lockhart said the economy would have to get a lot worse before the central bank would offer more stimulus.

Sectors linked with economic growth led the way higher as their recently beaten-down prices made them attractive to bargain hunters. The S&P financial sector index rose 1.6 percent. Bank of America gained 3.7 percent to $8.86.

Alcoa Inc rose 6.3 percent to $9.90 a day after the Dow component reported a surprise first-quarter profit, easing concerns about a weak earnings season.

"Expectations have been running very low, so the optimistic start to earnings season is a very welcome sign," said Jack Ablin, chief investment officer of Harris Private Bank in Chicago. "That said, we're going to get a broad sense of how industries are faring this week, and we may trade sideways until we get that."

On Tuesday, the S&P 500 closed below its 50-day moving average for the first time since December, and on Wednesday the level provided technical resistance to its rebound. The S&P's 50-day moving average is now near 1,373, close to Wednesday's session high.

Google Inc, JPMorgan Chase & Co and Wells Fargo & Co are among the companies slated to report later this week.

The Dow Jones industrial average rose 89.46 points, or 0.70 percent, to 12,805.39 at the close. The Standard & Poor's 500 Index gained 10.12 points, or 0.74 percent, to 1,368.71. The Nasdaq Composite Index advanced 25.24 points, or 0.84 percent, to 3,016.46.

Tuesday marked the S&P 500's largest daily percentage drop in four months. Investors will assess whether the slide presents a buying opportunity for those who missed the market's gains in the first three months of the year.

The U.S. economy kept growing moderately in the late winter months, although rising gas prices were beginning to worry producers and consumers across the country, the Federal Reserve said in its latest "Beige Book" summary of national activity. This assessment had little impact on equities.

European Central Bank Executive Board member Benoit Coeure, calming fears about the euro zone, said on Wednesday the central bank still had the Securities Market Programme (SMP) in place allowing it to purchase the debt of euro-zone nations, should the need arise.

Glass container maker Owens Illinois surged 6.9 percent to $23.52 a day after the company forecast a 35 percent rise in its first-quarter profit.

In contrast, the U.S.-listed shares of Nokia tumbled 15.7 percent to $4.24 after the mobile phone maker warned its phone business would post losses in the first two quarters this year, as it struggles to revamp its product line.

Bearish analysts see more declines ahead as a result of an overextended market that has lost its footing as the euro zone's debt crisis resurfaces and U.S. economic indicators soften.

Volume was light, with about 6.31 billion shares traded on the New York Stock Exchange, the American Stock Exchange and the Nasdaq, below last year's daily average of 7.84 billion.

More than three-fourths of the stocks traded on both the New York Stock Exchange and the Nasdaq closed higher.

(Editing by Jan Paschal)

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Dow, S&P fall for fifth day, but Alcoa up late

1 of 3. Traders work on the floor of the New York Stock Exchange, April 9, 2012.

Credit: Reuters/Brendan McDermid

By Ryan Vlastelica

NEW YORK | Tue Apr 10, 2012 4:40pm EDT

NEW YORK (Reuters) - The selloff in U.S. stocks accelerated on Tuesday, as the Dow and S&P 500 dropped for a fifth day, with the pullback coming on the cusp of earnings season.

The slide marked the S&P 500's worst day since December 8. The declines were the largest losses this year in terms of both points and percentage drops for each of the three major U.S. stock indexes.

All S&P 500 sectors ended solidly lower, with industrial and materials names suffering the biggest drops. About 80 percent of shares listed on the New York Stock Exchange and the Nasdaq Stock Market ended lower.

The major U.S. stock indexes each fell more than 1.5 percent, pushing the S&P 500 below its 50-day moving average of 1,372.30, an area viewed as a significant support level that will make or break the current uptrend.

"Dropping below that level suggests a loss of momentum, and it looks pretty widespread," said Katie Stockton, chief market technician at MKM Partners in Greenwich, Connecticut, who added that the S&P 500 could fall to about 1,350 before finding a new level of support.

The Nasdaq also slid below its 50-day moving average and closed below 3,000 for the first time since March 12.

Concerns about European debt have resurfaced and could be a catalyst for further declines as the yields on riskier Italian and Spanish debt climbed. U.S.-listed shares of Banco Santander (STD.N) fell 3 percent to $6.51.

Dow component Alcoa Inc (AA.N) climbed 5.4 percent to $9.82 in extended trading after the aluminum maker reported its quarterly results.

With 5 percent of the S&P 500 components having already reported, profits are seen rising 3.1 percent in the quarter, according to the Thomson Reuters Director's Report.

"We've clearly seen a major slowdown in earnings, which are dependent on global growth now that profit margins have stopped expanding, and global growth isn't great right now with all the issues in Europe," said Jim McDonald, chief investment strategist at Northern Trust Global Investments in Chicago, which has about $650 billion in assets under management.

The Dow Jones industrial average .DJI lost 213.66 points, or 1.65 percent, to 12,715.93 at the close. The Standard & Poor's 500 Index .SPX dropped 23.61 points, or 1.71 percent, to 1,358.59. The Nasdaq Composite Index .IXIC tumbled 55.86 points, or 1.83 percent, to 2,991.22.

Volume was higher than average, with about 8.18 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, above last year's daily average of 7.84 billion.

The CBOE Volatility Index .VIX jumped 8.4 percent to 20.39, and was up for the eighth straight day, its longest streak of consecutive gains in nearly nine years. At its session high, the VIX touched 21.06 - up almost 12 percent for the day.

The Standard & Poor's 500 Index is still up 8 percent so far this year - compared with its gain of 12 percent at the end of the first quarter.

But the benchmark index has fallen 4 percent in the past five sessions, its worst streak since November, as investors questioned the economy's strength and the U.S. Federal Reserve's inclination to keep easy money flooding into the market.

Friday's soft U.S. payrolls report added to the U.S. stock market's recent losses that were sparked by last Tuesday's minutes from the Fed's March policy meeting. The Fed's minutes were interpreted as showing the central bank was less than keen to launch more stimulus.

A Reuters poll on Monday showed most major Wall Street banks expect anemic growth in the U.S. job market and a struggling economic recovery to force the Fed to undertake another round of monetary stimulus.

Apple shares (AAPL.O) dropped quickly from hitting a new high of $644 per share to briefly top a $600 billion market capitalization. Its stock later fell to trade down 1.2 percent at $628.44 at the close.

Supervalu Inc (SVU.N) shares jumped 15.2 percent to $6.13 after the third-largest U.S. supermarket operator reported better-than-expected earnings and issued a full-year profit forecast above Wall Street's view.

Best Buy (BBY.N) shares hit their lowest since December 2008 and were at their session low after Chief Executive Brian Dunn resigned after 28 years with the world's largest consumer electronics retail chain. The stock fell 5.9 percent to $21.32, not far above the intraday low of $21.21.

(Editing by Jan Paschal)

Alcoa surprises Wall Street with first-quarter profit

1 of 2. People leave the Alcoa Business Services Center in Pittsburgh, Pennsylvania in this February 13, 2007 file photograph. Alcoa Inc, the largest U.S. aluminum producer, reported a first-quarter profit that topped Wall Street forecasts as prices for aluminum rose in the early months of 2012. Alcoa shares rose 6 percent to $9.80 in post-market trading.

Credit: Reuters/Jason Cohn/Files

By Steve James

NEW YORK | Tue Apr 10, 2012 5:26pm EDT

NEW YORK (Reuters) - Aluminum producer Alcoa Inc surprised Wall Street with a first-quarter profit after a loss in the fourth quarter of 2011 as global markets improved, especially in the aerospace and automobile sectors.

The results, which beat analysts' forecast for a loss, sent the company's stock up 6 percent to $9.80 in after-hours trading on the New York Stock Exchange.

Alcoa, which makes aluminum for aircraft, cars and beverage cans, raised its 2012 global growth forecast for the aerospace market by 3 percentage points to 13-14 percent and said it expects global growth in the automotive industry of 3-7 percent this year.

The company also projects a global aluminum supply deficit in 2012 and reaffirmed its forecast that global aluminum demand would grow 7 percent in 2012, on top of the 10 percent growth seen in 2011.

Alcoa said income from continuing operations in the first quarter was $94 million, or 9 cents per share, compared with a profit of $309 million, or 27 cents per share in the same quarter last year. Excluding items, income was 10 cents per share.

Revenue rose slightly to $6 billion, Pittsburgh-based Alcoa said. Analysts on average were expecting a loss of 4 cents per share and revenue of $5.77 billion, according to Thomson Reuters I/B/E/S.

"Clearly, they're doing much better downstream, which you'd expect because the metal price was down," said Charles Bradford, an analyst with Bradford Research in New York.

"I was expecting break-even, so I was higher than the average, but if you had told me 10 cents, I never would have believed it."

Results from Alcoa, the first company in the Dow Jones industrial average to report earnings for the March quarter, are considered a bellwether for the rest of the materials sector.

Alcoa saw prices for aluminum rise in the early months of 2012 and Chief Executive Klaus Kleinfeld said the company's performance rebounded strongly in the first quarter on a number of factors including stabilizing markets.

But he said: "Challenges remain in this economy."

Alcoa said the improvement over the fourth quarter was driven by strong productivity improvements across all businesses, higher realized prices for aluminum, and improved volume and mix. These were offset somewhat by a lower realized alumina price and higher input costs, the company said.

A 9 percent drop in the realized price of aluminum was partially offset by third-party shipments in the upstream businesses, better volume and mix in the midstream business, and improved volume in the downstream business, Alcoa said.

Compared to the first quarter of 2011, it said revenue in its commercial transportation business was up 32 percent and aerospace revenue rose 15 percent.

Alcoa's stock price has fallen 46 percent since April 2011 -- mostly on a drop in global aluminum prices -- prompting the company to cut the performance-based element of Kleinfeld's 2011 compensation by 45 percent.

Aluminum prices are down almost 20 percent from a year ago but have been creeping higher, reaching $2,126 per tonne on March 31 from $2,020 on January 1.

The company has already cut back aluminum production and last week said it would reduce production of alumina, a key raw material, by 4 percent.

(Reporting By Steve James; Editing by Bernard Orr)