Corporate results, Japan boost mood on Wall St

Global aluminium giant Alcoa is projecting a 12 per cent rise in demand for the metal this year. Photo / Thinkstock
Global aluminium giant Alcoa is projecting a 12 per cent rise in demand for the metal this year. Photo / Thinkstock

Stocks on Wall Street were up as investors' confidence was underpinned by better-than-expected US earnings and international support for Europe's debt.

The Dow Jones Industrial Average gained 0.51 per cent, the S&P 500 Index rose 0.52 per cent and the Nasdaq Composite Index advanced 0.46 per cent.

After the market close in New York yesterday Alcoa Inc reported profit excluding some items of 21 cents a share, beating the 19-cent average estimate of 15 analysts surveyed by Bloomberg.

Alcoa projected a 12 per cent rise in demand for aluminium this year.

Sears Holding Corp and Tiffany & Co also both raised their profit forecasts.

"Along with Alcoa, these raised outlooks suggest a stronger-than-expected season ahead," Adam Sarhan, chief executive at the New York-based Sarhan Capital, told Reuters.

The tone in Europe was positive too, after Japan promised to buy some of the bonds to be jointly issued later this month to raise funds to support Ireland. Tokyo later said it would use existing euro reserves to pay for the debt.

The euro last traded up 0.2 per cent at US$1.2968.

"It's a sigh of relief for the markets," Paul Zemsky, the New York-based head of asset allocation for ING Investment Management, told Bloomberg News.

"Japan stepping up and committing to buy European debt is good news because of the big scare of new bonds coming to market,"

Zemsky said.

"Economic fundamentals in the US are good and I'm very much optimistic about the earnings season and corporate outlooks,"

he said.

Meanwhile Portugal continued to resist calls to seek a bailout.

Prime Minister Jose Socrates said his country had beaten its goal for reducing the 2010 budget deficit and did not need outside help.

"The Portuguese government and Portugal will not ask for any aid or financial assistance for the simple reason that it is not necessary," Socrates told a news conference.

Yields on Portuguese 10-year bonds slipped, holding above 7 per cent, a level widely seen as unsustainable, after traders told Reuters the European Central Bank stepped in to buy government bonds for a second straight day.

On Wednesday Portugal is scheduled to sell up to 1.25 billion euros of bonds in an auction that will feature both five and 10-year paper.

Spot gold rose 0.3 per cent to US$1,378.66 at 12.18pm EST, underpinned by safe-haven demand.

"The market is able to rally, despite the fact the euro is still weak, and that is evidence that the safe-haven demand for gold has eclipsed the weakness in the euro, because they've both reacted to the sovereign debt crisis," James Steel, chief commodity analyst at HSBC, told Reuters.

US oil prices climbed as a key Alaskan pipeline remained shut.

By 1420 GMT, February US crude rose to US$90.10, up 85 cents.

- BusinessDesk

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