US stocks: Shares rally on Alcoa, jobs and oil under $60

NEW YORK - US stocks ended sharply higher on Friday, in a rally fueled by a triple whammy of strong earnings from Alcoa Inc., modest job creation and a drop of oil prices below $60.


The three major indexes posted their biggest one-day advances since April, with the Nasdaq closing at its highest point since January.


Shares of blue-chip Alcoa helped drive the Dow's rally, up 4.3 per cent a day after the leading aluminum maker reported better-than-expected earnings. International Business Machines Corp. and General Electric Co. climbed after favorable research notes inspired some buying.


"The Alcoa earnings were good and Alcoa is always a bellwether for basic industrial earnings," said Jim Awad, chairman of Awad Asset Management, of New York, who added that Alcoa's results suggested that investors will get more good news as the earnings season kicks off in earnest next week.


The Dow Jones industrial average climbed 146.85 points, or 1.43 per cent, to end at 10,449.14. The Standard & Poor's 500 Index gained 13.99 points, or 1.17 per cent, to finish at 1,211.86. The technology-laced Nasdaq Composite Index jumped 37.22 points, or 1.79 per cent, to close at 2,112.88.


The Russell 2000 index closed at an all-time high of 662.14, up 1.98 per cent for the day.


For the holiday-shortened week, the Dow was up 1.41 per cent, the S&P 500 was up 1.46 per cent and the Nasdaq was up 2.70 per cent.


Investors took heart in a US government report that showed employers added 146,000 jobs in June, below economists' forecasts calling for growth of 188,500 jobs.


"The job numbers were strong enough to indicate economic growth of around 3 per cent or better, but not so strong as to pressure wages and raise fears of inflation," Awad said.


BLUE-CHIP BOUNCE


While Alcoa shares surged on the earnings report, the stocks of IBM and GE rallied on research, pushing up the blue-chip Dow and the broader S&P 500.


Morgan Stanley said GE's current stock price was a buying opportunity, while Merrill Lynch noted that the e world's largest computer company's results are due out in mid-July and "even a mediocre result could support the stock." Alcoa rose $1.11 to $27.20 on the New York Stock Exchange.


Shares of GE increased 2.4 per cent, or 81 cents, to $34.99 and IBM's stock rose 2.5 per cent, or $1.92, to $79.30. Both trade on the NYSE


On Nasdaq, shares of Intel Corp. advanced 2.7 per cent, or 72 cents, to $27.28, and Microsoft Corp. rose 1.8 per cent, or 44 cents, to $25.09.


OIL EASES


Oil prices dropped sharply in afternoon trading, falling below $60. US crude for August delivery settled down $1.10 at $59.63 a barrel on NYMEX.


That was down from a session high of $61.90, a peak reached on fears that Hurricane Dennis would damage oil rigs in the Gulf of Mexico.


"If Dennis doesn't hit the refineries or the oil platforms, you'll probably get a decent break in oil the first part of next week, and probably get an extension of the rally," said Jeffrey Saut, chief investment strategist at Raymond James Financial, of St. Petersburg, Florida.


TERROR TAKEN IN STRIDE


Stocks extended their Thursday gains, which came despite a wave of London bombings that killed more than 50 people and wounded 700.


"The long-awaited terrorist attacks have occurred, and the world remains intact," said Milton Ezrati, senior economic strategist at Lord Abbett & Co., of Jersey City, New Jersey. "This has been a cloud over the market for years and will remain one. But for the time being, there's a sense of relief that the civilized world has weathered this." Trading was active, with 1.47 billion shares changing hands on the New York Stock Exchange, a hair above the 1.46 billion daily average for last year. About 1.69 billion shares traded on Nasdaq, below the 1.81 billion daily average last year.


The number of shares gaining in value exceeded the number declining by a ratio of more than 3 to 1 on the NYSE and by about 11 to 4 on Nasdaq.


- REUTERS