After five straight down days, North American stocks on Wednesday at last broke free of the worst losing streak in four months, as investors cheered a good start to the first-quarter earnings season and declining bond yields in Europe.
The Dow Jones industrial average closed at 12,805.39, up 89.46 points or 0.7 per cent. The broader S&P 500 closed at 1368.71, up 10.12 points or 0.7 per cent. In Canada, the S&P/TSX composite index closed at 12,026.76, up 91.47 points or 0.8 per cent.
The gains follow a sharp drop by major indexes on Tuesday, when Spanish bond yields approached their highest levels this year, raising concerns that the country is headed toward a financial crisis. On Wednesday, though, bond yields retreated somewhat, with the yield on the government’s 10-year bond falling to 5.83 per cent. Italian government bond yields also fell.
Meanwhile, Alcoa Inc. helped relieve some anxiety about the start of the earnings season after it reported a surprise profit of 9 cents (U.S.) a share after markets closed on Tuesday. While earnings were down sharply from last year, they nonetheless topped analysts’ expectations, lifting optimism that the rest of the earnings might also unfold relatively well. Alcoa shares jumped 6.2 per cent on Wednesday, marking the biggest gains among the 30 stocks in the blue-chip Dow.
Meanwhile, U.S. financials also showed strong gains: Bank of America Corp. rose 3.8 per cent and JPMorgan Chase & Co. rose 2.4 per cent.
In Canada, energy stocks were strong after the price of crude oil rose to $102.70 a barrel, up $1.68. Suncor Energy Inc. rose 1.5 per cent and Canadian Oil Sands Ltd. rose 1.2 per cent.
However, materials stocks lagged after the price of gold failed to move much, trading relatively stead at $1,660 an ounce. Barrick Gold Corp. fell 1.2 per cent and Goldcorp Inc. fell 2 per cent.