- The Washington Times - Friday, July 18, 2008

NEW YORK | Wall Street shot higher Thursday, extending its rally into a second session as tumbling energy prices bolstered an already upbeat mood that followed stronger-than-expected quarterly reports from big names such as JPMorgan Chase and United Technologies. The Dow Jones Industrial Average rose more than 200 points, bringing its two-day advance to more than 480.

Investors got a double dose of good news after weeks of angst about the economy. Light, sweet crude fell $5.31 to settle at $129.29 a barrel; oil has dropped more than $15 in just the past three sessions. And early Thursday, three components of the Dow industrials — JPMorgan Chase & Co., United Technologies Corp. and Coca-Cola Co. — issued comments that generally indicated their businesses are holding up despite sometimes difficult economic conditions.

The reports let investors put aside some of their worst fears about the economy. Still, Wall Street has had some up periods in the past few months as optimism grew — only to fall back into a downturn as worries about the financial sector and the economy have welled back up.

Beyond oil, natural gas prices also fell sharply Thursday after the Energy Department said domestic stockpiles rose last week — signaling a drop in demand. While levels remain below those of recent years natural gas fell 86.1 cents to settle at $10.537 per 1,000 cubic feet.

A sustained drop in energy costs would be welcome news for nearly all parts of the economy. Consumers have been hard-pressed by higher fuel and food costs. Wall Street is worried they will pare their spending on discretionary items to make room in their budgets for the higher-priced necessities. A pullback could be troublesome as consumer spending accounts for more than two-thirds of U.S. economic activity.

But the declines in energy and profit reports from marquee names left investors in an acquisitive mood again Thursday. The Dow rose 207.38, or 1.85 percent, to 11,446.66. The Dow on Wednesday surged 276 points after oil fell and Wells Fargo & Co. posted better-than-expected earnings.

The 4.4 percent advance over two days was the Dow’s best two-day percentage gain since October 2002 and the point increase gave the blue chips their best back-to-back point gain since late November last year.

Broader stock indicators also rose Thursday. The Standard & Poor’s 500 index advanced 14.96, or 1.20 percent, to 1,260.32, and the Nasdaq Composite Index rose 27.45, or 1.20 percent, to 2,312.30.

Corporate results helped buoy investor sentiment. JPMorgan Chase posted a 53 percent decline in its second-quarter earnings as mortgage and other loan defaults worsened, but the decline in profits wasn’t as steep as Wall Street had feared and the stock rose $4.86, or 13.5 percent, to $40.80.

Among other financials that gained, Fannie Mae and Freddie Mac jumped after Fitch Ratings affirmed long-term issuer default ratings on the government-chartered mortgage giants. Fitch cut Fannie’s preferred stock rating and put Freddie’s on watch for a possible downgrade. Investors have worried in recent weeks that they would run into serious financial troubles because of faltering mortgages. Fannie Mae rose $1.68, or 18 percent, to $10.93, while Freddie Mac rose $1.50, or 22 percent, to $8.33.

United Technologies rose $3.59, or 5.9 percent, to $64.70 after posting an 11 percent increase in its second-quarter profit. The maker of everything from jet engines to ventilation systems reported strong growth at its Otis elevator and Carrier air conditioner divisions. The company also raised its full-year forecast for revenue and per-share earnings.

Coca-Cola’s second-quarter earnings fell 23 percent as the world’s largest beverage company earned $1.42 billion. While the company’s revenue and earnings excluding items topped expectations, analysts said volume growth was lighter than expected. The stock fell $2, or 3.8 percent, to $50.34.

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