U.S. stocks rallied today, lifted by strong first-quarter profit reports from tech giant Google Inc. and heavy equipment maker Caterpillar Inc.
The Dow Jones industrial average closed up 228.87, or 1.81%, at 12,849.36; the S&P 500 rose 24.77, or 1.81%, closing at 1,390.33; and the Nasdaq composite was up 61.14, or 2.61%, to close at 2,402.97. All numbers are preliminary.
Google reported that strong online ad revenues helped it beat earnings estimates. Caterpillar’s profits also topped forecasts, largely due to robust sales in China and India, which reassured investors that U.S. economic weakness may be offset by solid demand abroad. Major U.S. companies generate nearly 50% of their revenues abroad and are helped by a weak U.S. dollar.
Citigroup added to the upbeat sentiment as its $5.1 billion first-quarter loss was smaller than some analysts had feared. But Standard & Poor’s did not cheer Citigroup’s results and put its AA-minus credit rating on “watch” for possible downgrade. Citigroup has written down about $40 billion in structured debt since the mortgage crisis started last summer.
“If we determine that the potential for earnings volatility and further depletion of the common equity component is not consistent with the AA rating category, we could lower the rating by one notch,” S&P analyst Tanya Azarchs said in a research note.
