stocks rise

Investoocks risaers have sent US stocks sharply higher on the latest reassuring news about the economy. This time, the news is about European banks.

European regulators, who yesterday issued the results of stress tests on the banks, say only a handful would struggle if the continent’s economy weakens. The latest earnings reports also convinced investors that the domestic economic recovery is proceeding.

The Dow Jones industrial average closed up 102.32, or 0.99 per cent, at 10,424.62.

General Electric delivered a shot of confidence to US investors when it raised its dividend on yesterday, pushing the S&P 500 through the key 1,100 level.

GE gained nearly 4 per cent in high volume after the US conglomerate increased its quarterly dividend by 20 per cent. GE’s move spurred heavy institutional buying and sparked a decisive move higher, a positive sign of rising investor optimism.

The S&P 500 rose above 1,100 for the first time in a month. The gain – along with other chart moves, such as an uptick on its daily moving average convergence-divergence, or MACD – sent a bullish technical signal to investors.

Manufacturers Honeywell International and Ingersoll-Rand posted better-than-expected results and raised full-year earnings views, further allowing investors to push aside fears of a return to negative growth. Honeywell added 2 per cent to $43.50 and Ingersoll-Rand gained 1.3 per cent to $37.29.

“On the whole the earnings season has been strong,” said Anton Schutz, at Mendon Capital in New York. “I think you got a pretty resilient economy despite the headlines.”