NEW YORK (Reuters) - U.S. stocks rose on Wednesday as Alcoa's better-than-expected revenue and a positive outlook boosted investor confidence ahead of an earnings season expected to show lackluster results.
The session's rise was the first of the week after the market retreated from the S&P 500's highest point in five years, hit last Friday. Worries about a weak earnings season kept the markets down earlier in the week.
Shares of Alcoa Inc (AA.N) were trading flat after early gains, following the company's earnings release after the bell on Tuesday. The largest U.S. aluminum producer said it expects global demand for aluminum to grow in 2013.
Traders have been cautious as the current quarter was shaping up like the previous one, with companies lowering expectations in recent weeks, said James Dailey, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
"So the big question and focus is on revenue, and Alcoa had better-than-expected revenue," which calmed the market a little, Dailey said.
Overall, corporate profits were expected to beat the previous quarter's meager 0.1 percent rise. Both earnings and revenues in the fourth quarter were expected to grow by 1.9 percent, according to Thomson Reuters data.
The lowered expectations also leave room for companies to surprise investors even if their results are not particularly strong, analysts said.
The Dow Jones industrial average gained 59.47 points, or 0.45 percent, at 13,388.32. The Standard & Poor's 500 Index .SPX rose 3.86 points, or 0.26 percent, at 1,461.01. The Nasdaq Composite Index was up 14.93 points, or 0.48 percent, at 3,106.74.
Clearwire Corp (CLWR.O) shares jumped 7.7 percent to $3.15 after Dish Network (DISH.O) bid $2.28 billion for the company, trumping a previous Sprint (S.N) offer and setting the stage for a takeover battle for the wireless service provider that owns crucial mobile spectrum.
Herbalife Ltd (HLF.N) stock rose 4 percent to $39.89 following news that hedge fund manager Dan Loeb took a stake of more than 8 percent in the nutritional supplements seller, according to a regulatory filing. Prominent short-seller Bill Ackman had previously accused the company of being a "pyramid scheme," which Herbalife has vehemently denied.
Facebook Inc (FB.O) shares rose above $30 per share for the first time since July 2012, trading up 4.7 percent at $30.43. Facebook, which has been tight-lipped about its plans after its botched IPO in May, invited the media to its headquarters next week.
Apollo Group Inc (APOL.O) slid after heavier losses early on, a day after it reported lower student sign-ups for the third straight quarter and cut its operating profit outlook for 2013. Apollo's shares were last off 6.6 percent at $19.55.
(Reporting by Gabriel Debenedetti; additional reporting by Angela Moon; Editing by Nick Zieminski)
Published Date: Jan 10, 2013 02:00 am | Updated Date: Jan 10, 2013 02:00 am