Published: Tuesday, 16 Oct 2012 | 10:15 AM ET
NEW YORK (Reuters) – Stocks rose on Tuesday as stronger-than-expected quarterly earnings from such bellwethers as Goldman Sachs and Johnson & Johnson alleviated concerns about the slowing global economy.
Dow components Johnson & Johnson <JNJ.N> and UnitedHealth Group <UNH.N>, both raised their full-year profit views while Goldman Sachs <GS.N> boosted its dividend.
J&J, the diversified healthcare company, rose 0.7 percent to $69.11 while UnitedHealth, the largest health insurer, fell 0.4 percent to $57.24 after rallying in premarket trading.
Goldman shares slipped 0.5 percent to $123.63 after posting earnings that beat expectations and revenue that more than doubled.
“Not only have the Dow components done very well today, but Goldman is extremely positive,” said Adam Sarhan, chief executive officer at Sarhan Capital in New York. “That a financial is able to have results like that in this kind of low-growth environment bodes well for the economy as a whole.”
The Dow Jones industrial average <.DJI> was up 59.80 points, or 0.45 percent, at 13,484.03. The Standard & Poor’s 500 Index <.SPX> was up 6.30 points, or 0.44 percent, at 1,446.43. The Nasdaq Composite Index <.IXIC> was up 9.94 points, or 0.32 percent, at 3,074.12.
Coca-Cola Co <KO.N> also reported a rise in earnings, but quarterly revenue came in short of Wall Street expectations, hurt by declines in Europe and Asia. Its shares fell 1 percent to $37.59.
Citigroup <C.N> unexpectedly announced that Chief Executive Vikram Pandit had resigned effective immediately, along with Chief Operating Officer John Havens. Michael Corbat, previously chief executive for Europe, Middle East and Africa, was named to succeed Pandit.
The announcement came one day after a surprisingly strong quarterly earnings report. Citi’s shares rose 1 percent to $37.10.
“Pandit is leaving at the top of the game and leaving the company in great hands, but the timing of the move is shocking,” Sarhan said. “Why they didn’t announce it with the earnings is a question that needs to be answered.”
The quarterly earnings season thus far has been mixed, with some early pessimistic results giving the S&P 500 its worst week since June last week. However, Citigroup’s results helped spark a rally on Monday.
Profits of S&P 500 companies are seen dropping 2.5 percent from the year-ago period, according to Thomson Reuters data. With about 8 percent of S&P companies having reported, 61 percent have topped profit expectations, under the average beat rate of 67 percent for the past four quarters.
Intel <INTC.O> and IBM <IBM.N> report after the market closes and are among the first major earnings reports of the tech sector, which has been marked by a number of profit warnings, including from Intel. IBM shares rose 0.4 percent to $209.91 while Intel rose 3 percent to $22.38.
Consumer prices rose 0.6 percent in September as the cost of gasoline surged, while industrial output was up 0.4 percent in September. Wall Street was little influenced by the data.
While earnings have been the primary driver for equities in recent sessions, overshadowing some strong economic indicators, investors will keep an eye on the meeting of European leaders later this week. European shares <.FTEU3> rose 0.9 percent on growing hopes the meeting would advance plans to tackle debt problems in Spain and Greece.
(Editing by Kenneth Barry)