Treasury Secretary Timothy F. Geithner in an interview with Bloomberg Television on Tuesday.
By CHRISTINE HAUSER
Published: April 18, 2011
Stocks on Wall Street rose on Tuesday as investors focused on corporate earnings and the economy, moving on from the negative credit rating outlook given to the United States the previous day.
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"Why are we paying attention to Standard and Poor's opinion, a firm that gave favorable ratings to junk mortgage funds at the behest of their investment-banker clients? I don't think the firm has any credibility left."Mark Gordon, Tucson
Stocks changed course after the three main equity indexes fell by more than 1 percent on Monday, when the ratings agency Standard & Poor’srevised its outlook on the nation’s Triple AAA rating — the highest level — to negative from stable.
The Dow Jones industrial average closed up 65.16 points, or 0.53 percent, at 12,266.75. The S.& P. 500-stock index was up 7.48 points, or 0.57 percent, at 1,312.62 and the Nasdaq gained 9.59 points, or 0.35 percent, at 2,744.97.
On Monday the three indexes posted their largest one-day drop in more than a month after the S.& P. announcement.
“The market has moved on from that,” said Quincy Krosby, a market strategist for Prudential Financial. “But the debt ceiling issue is not going to be forgotten.”
Bond prices were steady on Tuesday. The Treasury’s benchmark 10-year note rose 3/32, to 102 5/32, and the yield slipped to 3.36 percent from 3.37 percent late Monday.
Anthony G. Valeri, a senior vice president and market strategist for LPL Financial, said the behavior of the bond market suggested that the market does not see the default risk changing for United States Treasuries.
That was the view put forward by the Treasury secretary,Timothy F. Geithner, who tried in TV appearances to reassure investors that the Democrats and Republicans would reach a deal on the nation’s deficit, a concern at the heart of the S.& P.’s reasoning for lowering its outlook.
He said on Fox Business Network there was “no risk” that the United States would lose its AAA credit rating, disagreeing with Standard & Poor’s negative assessment, and said that investors were still confident in government bonds.
“He is out there defending,” said Ms. Krosby, referring to Mr. Geithner’s appearances.
But, she added: “Ultimately the markets will be the official arbiter of U.S. credit.”
Added Mr. Valeri: “I think he is trying to do potential damage control in Treasuries. Not that he needed to. The bond market saw right through the S.& P. move.”
“I think the market has moved on, and we have also got the Easter and Passover holidays this week,” he said.
The bank reporting season was in full swing. Goldman Sachs reported first-quarter net income of $2.74 billion, down 22 percent from the period a year earlier, after taking a one-time charge to pay back the investor Warren E. Buffett.
The profit, $1.56 a share, beat analysts’ expectations of 82 cents a share, according to Thomson Reuters, but its shares fell $1.92, to $151.86.
Bank of America declined 0.64 percent to $12.34; Morgan Stanley was down 1.69 percent to $26.10 and JPMorgan Chase was up 1.57 percent to $44.65. Financials as a whole rose 0.36 percent.
A Commerce Department housing market report said home construction rose 7.2 percent in March to a seasonally adjusted 549,000 units a year. Permits rose 11.2 percent, it said, helping shares of materials companies rise nearly 2 percent.
Alcoa rose nearly 2 percent to $16.44 and United States Steel was up 4.46 percent to $52.74. Johnson & Johnson rose more than 3 percent to $62.69. In its first quarter results, the company raised its earnings forecast for 2011 to $4.90 to $5.00 a share.
“The market is focusing on going back to the earnings season and it is punishing companies that have not done well,” said Ms. Krosby.
“But you had better news on the housing front and the market is rewarding the housing related stocks,” said Ms. Krosby. “If you look at the entire tone of the market, it is short on top line revenue growth, and the financials are a barometer of the U.S. economy. For their earnings not to come in as well, particularly when it comes to loan growth, is a thorn in the side of this recovery.”
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