Stocks rise as profits at banks provide boost

NEW YORK – Investors are finding encouragement about the direction of the economy from the latest batch of earnings reports.

Stocks rose Wednesday after a handful of banks, including Morgan Stanley, US Bancorp and Wells Fargo, posted better results for the July-September quarter. All of them also had higher loan losses, however, bringing fresh reminders that the broader economy is struggling even as the financial industry recovers.

Last week, Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. also reported higher credit losses as consumers and businesses struggle to pay off their bills.

The dollar fell to its lowest level against the euro since August 2008, lifting oil to a 2009 high. The rise in commodity prices helped energy and materials stocks.

Technology stocks rose after Yahoo Inc. and SanDisk Corp., a maker of flash memory cards, reported profits that topped analyst expectations after the close of trading Tuesday.

Other companies reported third-quarter results too, not all of them positive. Airlines slumped after American Airlines parent AMR Corp., Continental Airlines Inc. and UAL Corp.'s United Airlines posted losses.

The mixed earnings reports come as investors remain eager to see whether companies will be able to continue to improve earnings even as revenue growth remains difficult in many areas. Cost-cutting is again helping many turn in results that are ahead of expectations, as occurred in the first half of the year.

Jim Porter, chief executive of New Century Capital Management in Hinsdale, Ill., said the latest profit reports from banks are encouraging but still not great. He said investors are looking ahead to a continued improvement as reason enough to buy.

"No one wants to come in and make big bets right now, so what people are doing is putting a toe in the water and when it doesn't hurt them they're buying more," he said.

In early afternoon trading, the Dow Jones industrial average rose 41.19, or 0.4 percent, to 10,082.67.

The broader Standard & Poor's 500 index rose 7.01, or 0.6 percent, to 1,098.07, and the Nasdaq composite index rose 15.03, or 0.7 percent, to 2,178.50.

Two stocks rose for every one that fell on the New York Stock Exchange, where volume came to 702.1 million shares compared with 737.1 million shares traded at the same point Tuesday.

Bond prices fell, pushing yields higher. The yield on the benchmark 10-year Treasury note rose to 3.40 percent from 3.34 percent late Tuesday.

Crude oil rose $2.42 to $81.54 per barrel on the New York Mercantile Exchange as the dollar weakened. Commodities are priced in dollars, making them cheaper for overseas buyers when the greenback slides.

Energy stocks led the market higher as oil rose. Occidental Petroleum Corp. rose $2.65, or 3.2 percent, to $84.34, while Peabody Energy Corp. rose $2.37, or 5.4 percent, to $46.18.

Among banks, Morgan Stanley rose $2.12, or 6.5 percent, to $34.64 and US Bancorp jumped $1.56, or 6.7 percent, to $25.36. Wells Fargo slipped 43 cents to $30.01.

SLM Corp., the student lender known as Sallie Mae, jumped $2.57, or 28.9 percent, to $11.47 after its third-quarter earnings as credit markets improved and student loan activity increased.

Yahoo rose 70 cents, or 4.1 percent, to $17.87, while SanDisk jumped $2.07, or 9.6 percent, to $23.55.

AMR shares fell 61 cents, or 8 percent, to $7.05 and Continental slid $1.07, or 6.7 percent, to $14.85, while UAL fell 60 cents, or 7.6 percent, to $7.30.

Shares of Apple Inc. set a record, topping its previous trading high of $202.96 from Dec. 27, 2007. The company, which on Monday posted a 47 percent jump in its third-quarter earnings, rose $7.01, or 3.5 percent, to $205.77.

The Russell 2000 index of smaller companies rose 5.13, or 0.8 percent, to 618.54.

Overseas, Japan's Nikkei stock average fell 0.03 percent. Britain's FTSE 100 rose 0.3 percent, Germany's DAX index rose 0.4 percent, and France's CAC-40 advanced 0.1 percent.