Stocks Rally 2% on Wells Fargo, Crude Declines

123jump.com Staff
16 Jul, 2008
New York City

U.S. benchmark indexes increased more than 2% after investors bid up banks and other lenders. Wells Fargo reported 25% decline in earnings but exceed expectations of some investors and increased its quarterly dividend by 10% to 34 cents per share. The news of better earnings lifted stocks of banks, insurers and lenders. Crude oil futures dropped as much as 5% after the weekly inventories data showed an increase.

[R]2:40 PM New York – U.S. stocks rallied on the back of Wells Fargo earnings and a drop in crude oil prices.[/R]

U.S. stocks rallied in the late afternoon on earnings of Wells Fargo and a sharp drop in crude oil futures. Wells Fargo reported 25% decline in earnings and increased its dividend 10%, lifting mood on the Wall Street.

The weekly inventories of crude oil increased 3 million barrels from the previous week. Crude oil futures dropped as much as $6.40 a barrel before stabilizing at a decline of $4.52 to $134.22.

Dow Jones Industrial Average gained 170.88 or 1.41% to 11,132.97 and S&P 500 gained 16.60 or 1.4% to 1,231.30.

Dow Gainers and Losers

Of the 30 stocks in Dow Jones Industrial Average 18 stocks gained and 12 declined.

Alcoa Inc led the decliners in the Dow Jones Industrial Average with a loss of 1.59% or $0.55, to $33.96 followed by losses in Du Pont of 1.55% or $0.64, to $40.52, in Procter and Gamble of 1.24% or $0.80, to $63.55, in United Technologies of 1.10% or $0.66, to $59.42 and in Exxon Mobil Corp of 0.84% or $0.69, to $81.50.

Bank of America led the gainers in the Dow Jones Industrial Average index with a rise of 7.40% or $1.37, to $19.89 followed by increases in JP Morgan Chase of 6.13% or $1.90, to $32.92, in Citigroup Inc of 3.85% or $0.56, to $15.12, in General Motors of 3.76% or $0.37 to $10.21 and in America International Group of 3.49% or $0.72 to $21.36.

Stock Movers

Alpha Natural Resources Inc surged $10.03 to $105.06 after it agreed to a $10 billion or $128 per share buyout offer from steel maker Cleveland-Cliff. Alpha Natural ((ANR)) stock in the last one year traded as high as $119.02 in July 2008 and as low as $15.92 in August 2007. Based on the yesterday’s closing price the company has a market cap of $7.71 billion. Cleveland-Cliff ((CLF)) fell $9.96 or 8.8% to $101.52.

The coal mining companies have been in demand as demand for steel remains elevated, lifting prices of raw materials. The merged company will be named Cliff Resources and forecast revenue in 2008 of $6.5 billion and operating earnings of $1.9 billion.

Chicago Bridge & Iron dropped 18% or $6.82 to $29.57 after it took a charge of $317 million or $2.32 per share on higher costs at its natural gas projects in the UK and lowered its annual outlook. Chicago Bridge & Iron ((CBI)) in the last one year traded as high as $63.50 in January 2008 and as low as $29.00 in August 2007. Based on the yesterday’s closing price the company has a market cap of $2.88 billion.

Wells Fargo & Company ((WFC)) rose $5.37 or 26% to $25.86 after it reported revenue increase 16% to $11.5 billion. Net income in the quarter fell to $1.75 billion or 53 cents per share compared to $2.28 billion or 67 cents per share from a year ago quarter.

Gannett Company ((GCI)) dropped 92 cents to a record low of $16.44 after it reported second quarter earnings fell 36%. The news also dragged New York Times ((NYT)) stock to a record low of $12.42.

Lehman Brothers ((LEH)) jumped $2.18 to $15.40 after SEC initiated a probe to hunt down naked short sellers in the brokerage firm and investigate short sellers of failed Bear Stearns. The regulatory arm wants to curb short selling in Fannie Mae and Freddie Mac.

S&P Movers

Of the stocks in S&P 500 index, 331 increased 164 declined and 5 remained unchanged.

Gannett Co led the decliners in the S&P 500 index with a loss of 12.33% or $2.14, to $15.21 followed by in losses in AK Steel Holding of 4.44% or $2.35, to $50.62, in US Steel Corp of 3.95% or $6.13, to $148.92, in Titanium Metals of 3.85% or $0.43, to $10.74 and in Freeport-Mcmoran of 3.80% or $3.99, to $100.98.

Wells Fargo & Co led the gainers in the S&P 500 index with a rise of 22.09% or $4.53, to $25.04 followed by increases in First Horizon Na of 16.64% or $0.98, to $6.87, in Wamu Inc of 15.79% or $0.57, to $4.18, in Altera Corp of 12.65% or $2.43 to $21.64. Fannie Mae of 11.32% or $0.80 to $7.87.