Stocks' big bank boost
Wells Fargo's better-than-expected report fires up an early financial sector rally. House prepares to vote on Obama stimulus plan.
NEW YORK†(CNNMoney.com) -- Wells Fargo's better-than-expected quarterly results and optimism about the Obama administration's stimulus plan were among the factors lifting stocks Wednesday morning.
The Dow Jones industrial average (INDU) gained 140 points, or 1.7%, in the early going. The Standard & Poor's 500 (SPX) index added 17 points, or 2.1%, and the Nasdaq composite (COMP) added 32 points or 2.2%.
If the markets end higher Wednesday, it would mark the fourth consecutive rally for the S&P 500 and Nasdaq, and the third consecutive rally for the Dow. All three major gauges saw moderate gains on Monday and Tuesday.
Government stimulus packages, particularly the Treasury Department's plan to provide 23 local banks with $386 billion, are helping to fuel the futures markets, said Peter Cardillo, chief market economist for Avalon Partners.
"I think it restores confidence to the market," said Cardillo, noting that the package favors "good banks," which is why it's well-received by investors. "The market, in general, is hungry for confidence."
Stimulus plan: The House of Representatives prepared to vote Wednesday on the $825 billion package aimed at jump-starting the economy that President Obama has lobbied for aggressively.
House Speaker Nancy Pelosi, D-Calif., called the bill "the most important piece of legislation Congress will vote on this year," arguing that the bill supports jobs, tax cuts and accountability to taxpayers. But Republicans have expressed concern about the large amount of spending in the bill, and have criticized the tax cut provisions for not going far enough. (Full story)
Fed: The Federal Reserve is also due to conclude its two-day policy meeting. With rates already near zero, there isn't much cutting policymakers can do, but investors will pore over the Fed's statement to see if it plans other steps to fight the credit crisis.
Corporate results: Wells Fargo (WFC, Fortune 500) reported quarterly results that were better than analysts expected. It also said it will maintain a 34-cents-a-share quarterly dividend and will not seek more money from the Treasury Department's TARP. Shares of Wells Fargo surged 16% in early trading.
"Any type of earnings is giving people clarity and that clarity is a real positive," said Anthony Conroy, head trader at BNY ConvergEx Group. He said investors were "expecting the worst" from earnings, but they were "not as bad as thought."
Yahoo (YHOO, Fortune 500) reported a quarterly net loss after U.S. markets closed Tuesday. But excluding certain charges, the company said it earned 17 cents per share, topping analysts' consensus forecast. The stock rose nearly 6% in early trading. (Full story)
World markets: Stocks in Asia rose, tracking gains on Wall Street overnight. European shares rallied in the afternoon, bolstered by the U.S. stimulus plan, with indexes in London, Paris and Frankfurt all gaining between 2% and 4%.
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