Investors focus on IBM, positives
NEW YORK -- Wall Street rallied Tuesday after IBM approved a $15 billion stock buyback, suggesting to investors that there are still some companies out there with financial muscle. The Dow Jones industrial average rose more than 110 points.
IBM Corp., one of the 30 companies that make up the Dow, said the buyback will boost its earnings for 2008 past Wall Street's prior forecasts. Shares of Big Blue vaulted $4.30, or 3.9 percent, to $114.38.
The buyback news followed two dismal economic reports showing core wholesale prices shot up more than expected last month and that consumer confidence is waning. The data reinforced worries that the United States is suffering from stagflation, a state when the economy weakens amid rising costs.
"The market is kind of overcoming negative news, which is potentially a next step toward higher prices," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research. "At least in the short-term, it's a nice change here."
Tuesday's pair of economic reports was decidedly downbeat.
The Conference Board's index of consumer confidence plunged in February to 75.0 from a revised 87.3 in January. The reading was the lowest since the index registered 64.8 in February 2003, and came in far below analysts' average estimate.
"The market is holding up extraordinarily well given all this negative stuff," said Scott Fullman, director of investment strategy for I. A. Englander & Co. He said the prospect of more corporate buybacks was a "positive for the market," but also, "the market is tired of going down."
Cementing the belief that costs won't be easing anytime soon was oil's surge back above $100 a barrel. Light, sweet crude rose $1.65 to a record $100.88 a barrel on the New York Mercantile Exchange.
Positive news from some retailers helped keep stocks afloat.
Target Corp., the discount store chain, said fourth-quarter profits fell due to poor holiday sales and a quirk in the earnings calendar, but results came in above the average forecast. Target rose $1.64, or 3.1 percent, to $54.89.
RadioShack Corp. rose after the electronics retailer posted a rise in fourth-quarter profit and higher sales than analysts predicted. RadioShack rose $3.30, or 21.5 percent, to $19.13.