Stocks rally, rebound from five-day slide

By msnbc.com news services

Stocks rallied Wednesday after an encouraging start to earnings season helped equities rebound from five days of losses that pushed the S&P 500 and the Nasdaq below key technical levels.

The Dow Jones industrial average was up 89 points at the close of trading.

Sectors linked with economic growth, such as financial stocks, led the way higher as their recently beaten-down prices made them attractive to bargain hunters.

Alcoa Inc shares rose one day after the Dow component reported a first-quarter profit instead of a loss that Wall Street was expecting, easing concerns about a weak earnings season.

"Expectations have been running very low, so the optimistic start to earnings season is a very welcome sign," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "That said, we're going to get a broad sense of how industries are faring this week, and we may trade sideways until we get that."

Google Inc, JPMorgan Chase & Co and Citigroup Inc are among the companies slated to report later this week.

Tuesday marked the S&P 500's largest daily percentage drop in four months. Investors will evaluate if the slide presents a buying opportunity for those who missed the market's gains in the first three months of the year.

The economy kept growing moderately in the late winter months, although rising gas prices were beginning to worry producers and consumers across the country, the Federal Reserve said in its latest "Beige Book" summary of national activity. This assessment had little impact on equities.

European Central Bank Executive Board member Benoit Coeure, calming fears about the euro zone, said on Wednesday the central bank still had the Securities Market Program (SMP) in place allowing it to purchase the debt of euro-zone nations, should the need arise.

In company news, the U.S. Justice Department sued Apple Wednesday over alleged electronic book price-fixing.

The U.S.-listed shares of Nokia tumbled after the mobile phone maker warned its phone business would post losses in the first two quarters this year, as it struggles to revamp its product line.

Bearish analysts see more declines ahead as a result of an overextended market that has lost its footing as the euro zone's debt crisis resurfaces and economic indicators soften.

Investors have an eye on developments in Indonesia after a massive earthquake and aftershocks struck off its coast. While authorities said there were no reports suggesting a major threat, the news brought back memories of a 2004 tsunami that killed about 230,000 people in 13 Indian Ocean countries, including Thailand, Sri Lanka and India.

Reuters contributed to this report.

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