Stocks turned in impressive gains on Wednesday, boosted by a round of upbeat earnings from key companies as investors looked beyond the U.K.'s dip into recession and a disappointing reading on U.S. durable goods orders.
The Dow Jones industrial average closed at 13,090.72, up 89.16 points or 0.7 per cent. The broader S&P 500 closed at 1390.69, up 18.72 points or 1.4 per cent. In Canada, the S&P/TSX composite index closed at 12,111.06, up 130.96 points or 1.1 per cent.
Apple Inc. dominated the action, after the iPhone and iPad maker reported spectacular quarterly results on Tuesday after markets closed. The shares surged 8.9 per cent, snapping a losing streak for the stock and taking it back to within 5 per cent of its record high.
The gains were so strong that they had a big impact on the relative performances of major U.S. indexes, depending upon Apple's weighting within them – with the Nasdaq composite index doubling the gains of the S&P 500, which in turn doubled the performance of the Dow (Apple is not a member of the Dow industrials).
Apple wasn't a one-man act, though. Boeing Co. rose 5.3 per cent after its earnings rose 56 per cent over last year and the aerospace company raised its forecast. American Express Co. rose 2.2 per cent and DuPont rose 2.1 per cent. However, Caterpillar Inc. fell 4.6 per cent after its quarterly earnings topped expectations but it delivered weaker-than-expected revenue and said that sales fell in China.
In Canada, Rogers Communications Inc. fell 5.7 per cent after it reported earnings and revenue that disappointed expectations.
However, the Canadian benchmark index was lifted by strong commodity producers, even as commodity prices themselves failed to rally. Suncor Energy Inc. rose 1.4 per cent and Canadian Oil Sands Ltd. rose 2.2 per cent, with the price of crude oil rising to $104.12, up 57 cents.
Materials stocks were also strong, but largely because of fertilizer producers: Potash Corp. of Saskatchewan Inc. rose 3.9 per cent after Mosaic Co. reported that it has seen a "rapid acceleration" in demand and raised its sales volume forecast.
The economic backdrop to the stock market gains wasn't too uplifting. The U.K. reported that its economy had slid back into recession, with a contraction in its gross domestic product in the first quarter raising concerns that the country's austerity measures might not be helping the economy. The recession arrives as a backlash against austerity measures in the euro zone has led to some political instability.
Meanwhile, U.S. durable goods orders fell 4.2 per cent in March, which was considerably worse than what economists had been expecting.
Given the uneven economic reports in recent weeks – including disappointing jobless claims – the Federal Reserve gave no indication in its monetary policy statement, released on Wednesday afternoon, that it is gearing up for another stimulus plan to help revive the recovery. Instead, the Fed raised its growth forecast for the U.S. economy in 2012 to a range of 2.4 per cent to 2.9 per cent, up from a previous forecast calling for 2012 growth of 2.2 per cent to 2.7 per cent.