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Earnings drive stocks to new 2011 highs

Earnings drive stocks to new 2011 highs

April 26th, 2011 in News

NEW YORK (AP) - Stocks jumped to their highest levels in nearly three years Tuesday thanks to signs that earnings are rising for U.S. companies and consumers are feeling more confident about the economy. The Russell 2000, the benchmark index of small companies, neared a record high.

The new highs continue a historic recovery in the stock market. Stock indexes have more than doubled since hitting a 12-year low in March, 2009. The fastest bull market since the 1950s has now erased most of the losses stemming from the financial crisis.

Investors who bought at the top of the market in 2007 have now lost 4.2 percent, including reinvested dividends. Analysts predict stocks will continue to rise if unemployment keeps falling and global demand leads to more profit growth.

The Standard and Poor's 500 index -the benchmark for most mutual funds -reached its highest level since June 2008. It gained 11.99 points, or 0.9 percent, to 1,347.24. It's still 16 percent below the record high of 1,565 it reached in October 2007.

The Dow Jones industrial average also marked a new high for the year, rising 115.49 points, or 0.9 percent, to 12,595.37. The Nasdaq composite rose 21.66 points, or 0.8 percent, to 2,847.54.

The Russell 2000 rose 1 percent to 853.04, near the record high of 855.77 that it reached in July 2007.

Better-than-expected earnings reports from companies ranging from airlines to office products manufacturers helped drive a broad rally that included all 10 company groups that make up the S&P index. Industrial companies gained nearly 2 percent, the most of any group.

Tuesday's gains continued a strong first-quarter earnings season. Nearly 8 in 10 companies in the S&P index that have reported earnings have fared better than analysts were expecting, according to Jonathan Golub, the chief U.S. stock strategist at UBS.

Stocks also got a lift from a report on consumer confidence that showed that worries about rising prices and unemployment eased in April. Among the encouraging signs, those who said jobs are "hard to get" dropped, while those who expected higher incomes rose.