IBM could give the rally more fuel

By Charley Blaine and Elizabeth Strott

After a huge rally today that pushed the Dow Jones industrials up 257 points, stocks are likely to open higher still on Thursday in the wake of bullish news from IBM Corp. (IBM, news, msgs).

Big Blue's shares were up 2.6% to $123.65 in after-hours trading after it reported a 26% year-over-year increase in net income for the first quarter and an 11% jump in revenue. Earnings per share were $1.65, up 36% from a year ago.

It forecast 2008 earnings of at least $8.50 a share, up 18% from 2007. "We feel good about the rest of the year," CEO Sam Palisano said.

IBM's bullish report, coupled with decent first-quarter earnings from online auctioneer eBay Inc. (EBAY, news, msgs), ended a day that cheered investors enormously. The big rally was a direct result of bullish guidance from Intel (INTC, news, msgs) and better-than-expected earnings from JPMorgan Chase (JPM, news, msgs) and Wells Fargo (WFC, news, msgs).

Wall Street basically ignored bad news on energy: Crude oil briefly topped $115 a barrel in New York and ended at a new closing high of $114.93. That's bad for consumers struggling with ever-higher gasoline prices. But crude's gain did pull energy stocks higher.

At the same time, the Federal Reserve's Beige Book report, an anecdotal snapshot of the economy, strongly suggested that the economy was continuing to sink. And the Commerce Department said today that housing starts in March were at the lowest levels in 17 years.

But the bullishness also reflected something else: Wall Street understands that the falling dollar, while boosting inflation pressures, is giving the results of any U.S. company with significant foreign business an extra boost.

The dollar was lower today against the British pound, yen and euro. The U.S. Dollar Index was off slightly to 71.65. Interest rates moved higher as investors sought stocks over bonds.

Meanwhile, traders took to heart comments today and Tuesday from bankers such as JPMorgan's Jamie Dimon and Lehman Bros.' (LEH, news, msgs) Richard Fuld that the worst of the credit crunch is over, although a recovery will take time.

The Dow's 257-point today pushed the blue-chip index up 2.1% to 12,619. The Standard & Poor's 500 Index added 30 points, or 2.3%, to 1,365, and the Nasdaq Composite Index closed up points, or 2,8%, to 2,350.

It was the Dow's 17th gain of 100 points or more in 2008. JPMorgan Chase was the best performer of the 30 Dow stocks, with a 6.7% gain to $44.96, followed by Intel, up 5.8% to $22.13. Both were higher in after-hours trading.

Twenty-eight Dow stocks were higher, along with 457 S&P 500 stocks and 97 Nasdaq-100 ($NDX.X) stocks.

Transportation stocks positively boomed, with the Dow Jones Transportation Index ($DJT) jumping nearly 3.9% to 5,073. Nineteen of the 20 stocks in the index were higher, with JetBlue Airways (JBLU, news, msgs) showing the only loss, down 4 cents to $4.94.

Railroad stocks were higher because of booming export markets for agricultural commodities like grains as well as fertilizers. BNSF Railway (BNI, news, msgs), formerly Burlington Northern Santa Fe, was up 4.7% to $99.30.

Energy prices -- New York close

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$114.93	$113.79	$1.14	13.14%	19.74%
Heating oil (per gallon)	$3.2830	$3.2739	$0.0091	7.67%	23.91%
Natural gas (per million BTU)	$10.4330	$10.2050	$0.2280	3.29%	39.42%
Unleaded gasoline (per gallon)	$2.9390	$2.8810	$0.0580	12.33%	17.99%

IBM earnings shows tech's strength

IBM's earnings report -- especially its services, consulting and software business -- suggested better technology earnings in the face of a weak U.S. economy.

"This is great for The Street, great for technology. IBM is a bellwether for global technology issues, especially the services area," Ted Parrish, co-portfolio manager at Henssler Equity Fund, told Reuters.

Analysts had worried that the havoc of the global credit crunch would cause big financial companies, a key customer group for technology services, to cut spending.

IBM's first-quarter net income rose to $2.32 billion, or $1.65 per share, from $1.84 billion, or $1.21 per share, a year earlier. Revenue was $24.5 billion, up from $22 billion. Currency gains contributed 7 percentage points to revenue growth.

The results topped analysts' average targets for profit of $1.45 per share and revenue of $23.7 billion, Reuters said.

"The magnitude of the beat was unexpected," Zach Rosenstock, an analyst at Wayne Hummer Wealth Management, told Reuters. "You're seeing strength in all of their business lines. The U.S. is definitely a drag, but it is only 35% of revenues. They have really positioned themselves well for a downturn in the U.S. market."

EBay sees more consumer caution

EBay's 22% profit gain topped Wall Street's average estimate, as pricing changes increased online auction listings and pushed revenue above all forecasts.

The company also raised its 2008 revenue target, but its stock barely rose as executives said the softening U.S. and British economies had modestly slowed demand and that auction customers at the end of the quarter were less inclined to buy.

• Top Stocks blog: Questions remain about eBay

"While we are raising our full-year outlook, we still remain cautious about the economic environment," Chief Financial Officer Bob Swan told investors on a conference call after the report.

EBay is in the midst of a long-term plan to revive growth in its core auctions business that involve sweeping changes to how buyers and sellers deal with one another on the site.

The company earned $459.7 million, or 34 cents a share -- buoyed by a buyback of 3% of its shares -- compared with $377.1 million, or 27 cents a share, a year ago. Revenue rose 24% to $2.19 billion.

EBay raised its projected 2008 growth rate by 2 to 3 percentage points from a downbeat January forecast, setting its net revenue target at $8.7 billion to $9 billion.

Intel jumps on bullish guidance

Intel shares were up 5.8% to $22.13 today and was an additional 0.8% to $22.30 in after-hours trading.

Late Tuesday, Intel, a major tech bellwether, reported weak first-quarter earnings but said that sales had topped analysts' expectations. Better, the company offered better-than-expected guidance for the second quarter and all of 2008.

Intel was the second-best performer of the 30 Dow stocks, 11th best among Nasdaq-100 stocks and 28th among S&P 500 stocks.

Earnings fell to $1.44 billion, or 25 cents per share, down from $1.64 billion, or 28 cents per share, in the first quarter last year. Analysts had expected 25 cents. The sales picture looked better, though -- revenue was up nearly 10% to $9.7 billion, topping The Street's estimate of $9.2 billion -- and that was enough to send the Dow component up $1.23, or 5.9%, to $22.14 in midday trading.

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Intel said it expects second-quarter sales to be between $9 billion and $9.6 billion; analysts expect sales to be $9.26 billion.

Intel cut its first-quarter gross-margin forecast last month, citing weaker prices for NAND flash-memory chips. Rival Advanced Micro Devices (AMD, news, msgs) has also struggled with pricing issues.

• MSN's Stock Challenge: Win $15,000!

"People might now say maybe it's safe to put your feet in the water" with Intel, Hans Mosesmann, analyst at Raymond James, told Bloomberg News. "They have a super product lineup, and AMD is in a death spiral."

The Philadelphia Semiconductor Index ($SOX.X) was up 5.5% to 371.

JPMorgan, Coca-Cola top estimates

JPMorgan Chase was a huge star today, with shares jumping 6.7% to $44.96, the best Dow performer on the day.

JPMorgan reported first-quarter earnings of $2.4 billion, or 68 cents per share, and the stock was up 5.2% to $44.30

That's down 50% from the $4.8 billion, or $1.34 per share, that the banking giant earned in the same quarter last year -- but it topped Wall Street's expectations, and that was good news for the financials.

Analysts had expected the bank to earn 61 cents per share.

Shares of JPMorgan rose $2.02, or 4.8%, to $44.14 in midday trading.

"Over the longer term, this company is a phenomenal company," Punk, Ziegel analyst Dick Bove told CNBC this morning. "These (financial) stocks are cheap."

Another expert agreed. "These are good businesses. They're just not as good as they were," Byron Wien, chief strategist at Pequot Capital, told CNBC.

Wells Fargo: When bad news is good news

Wells Fargo shares were up 4.3% to $29.01 today after the banking company said quarterly profit fell 11% to $2 billion, or 60 cents per share, from $2.24 billion, or 66 cents, a year earlier. Revenue increased 12% to $10.56 billion.

Analysts had expected earnings of 57 cents per share on revenue of $10.4 billion, Reuters said.

Results included $485 million of Visa gains. Average loans grew 19%, and core deposits increased 9%.

The bank set aside $2.03 billion for credit losses, nearly triple the year-earlier level, and net charge-offs more than doubled to $1.53 billion.

Despite the housing slump, mortgage applications totaled $132 billion, soaring 45% from the fourth quarter. Wells Fargo has a reputation as a conservative mortgage lender.

"That's exactly an area that plays to our strengths, and we know we're picking up market share," Chief Financial Officer Howard Atkins told Reuters.

Atkins expects more housing-market struggles, however. "We're closer to the bottom than we were six months ago, but we're not at the bottom yet," he said.

Coca-Cola net jumps 19%

Coca-Cola (KO, news, msgs) said first-quarter net income rose 19% to $1.5 billion, or 64 cents per share, from $1.26 billion, or 54 cents per share. Excluding restructuring charges, Coca-Cola earned 67 cents per share, above analysts' expectations of 63 cents.

Net operating revenue rose to $7.4 billion from $6.1 billion last year, with 9 percentage points of the increase coming from the dollar's decline against other currencies. Analysts including John Faucher of J.P. Morgan Securities had estimated the currency gain would account for a maximum of 6%, Bloomberg News said.

Total unit case volume rose 6% and international case volume rose 7%.

Shares finished up 0.3% to $61.15. Coca-Cola is a consumer staple stock, and these were static today as techs, banks and materials stocks commanded investor attention.

Oil keeps climbing

Crude oil hit a new closing high today, finishing at $114.93 a barrel, up 1% from Tuesday. It topped $115 a barrel with a new intraday high of $115.07 just before the close.

The Amex Oil Index ($XOI.X) was up 2.7% to 1,470. Dow components ExxonMobil (XOM, news, msgs) and Chevron (CVX, news, msgs) rose 2.4% to $92.99 and 2% to $91.93, respectively.

The so-called black gold is up 19% so far this year and up 79% over the past year.

Oil's surge is partly due to the weak dollar. Crude prices, which are denominated in dollars, generally rise when the dollar declines. A weak dollar makes oil less expensive to buyers holding foreign currencies and hits oil-producing companies' profits, forcing them to boost prices.

Gasoline prices have also been surging. The average price of a gallon of regular, self-serve gas was $3.399 this morning, according to the AAA Fuel Gauge Report.

CPI no surprise

The Consumer Price Index rose 0.3% in March, the Labor Department reported this morning, in line with economists' expectations.

Energy prices rose 1.9% last month, and food prices were up 0.2%.

The core CPI, which excludes volatile food and energy prices, rose 0.2% last month, also in line with expectations.

The CPI report includes prices consumers pay for services from movie tickets to gasoline fill-ups.

On Tuesday, a government report that March producer prices had jumped much higher than economists had predicted sent a wave of inflation chills through the markets.

Short hits from the markets -- 4 p.m.

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	1.115%	1.100%	0.015	-17.41%	-64.49%
5-year Treasury note yield	2.820%	2.664%	0.156	11.24%	-18.38%
10-year Treasury note yield	3.696%	3.570%	0.126	6.64%	-8.40%
30-year Treasury bond yield	4.525%	4.405%	0.120	4.14%	1.48%
Currencies
U.S. Dollar Index	71.645	72.290	-0.645	-0.72%	-6.58%
British pound in dollars	$1.9747	$1.9639	0.0109	-0.45%	-0.73%
Dollar in British pounds	£0.5064	£0.5092	-0.0028	0.46%	0.74%
Euro in dollars	1.5972	1.5800	0.0172	1.41%	9.28%
Dollar in euros	€ 0.6261	€ 0.6329	-0.0068	-1.39%	-8.49%
Dollar in yen	101.61	101.83	-0.22	1.80%	-9.16%
Canadian dollar in U.S. dollars	$0.998	$0.983	$0.0154	2.10%	0.53%
U.S. dollar in Canadian dollars	$1.003	$1.018	-$0.0149	-2.06%	-0.51%
Commodities
Gold	$948.30	$932.00	$16.30	2.30%	13.16%
Copper	$3.9955	$3.8600	$0.14	1.29%	31.39%
Silver	$18.3250	$17.8500	$0.47	3.59%	22.82%
Corn	$6.0350	$6.0600	-$0.02	6.39%	32.49%
Crude oil (NYMEX) (per barrel)	$114.93	$113.79	$1.14	4.35%	19.74%