* Strong Alcoa profits launch earnings season
* Intel beats on profit, sales after closing bell
* Costs of protection in options rises
* Dow up 1.4 pct, S&P up 1.5 pct, Nasdaq up 2 pct
* For up-to-the-minute market news see []
(Updates with Intel rising after the closing bell, adds gains
in stock futures, volume in final two paragraphs)
By Leah Schnurr
NEW YORK, July 13 (Reuters) - U.S. stocks rallied for a
sixth straight day on Tuesday after Alcoa's quarterly results
heartened investors that had fled to the sidelines on jitters
about the sustainability of the economic recovery.
Markets looked set to get another earnings-driven boost
Wednesday after Intel Corp <INTC.O> reported results that beat
expectations after the market closed. The chipmaker also gave a
stronger-than-expected sales forecast.
U.S. stock index futures rose, while Intel jumped more than
5 percent to $22.16 in extended trade. For details, see
[]
Alcoa Inc <AA.N>, the largest U.S. aluminum producer and
seen as a bellwether for the economy, rose 1.2 percent to
$11.00 after it reported stronger-than-expected results and
raised its estimate for global aluminum consumption.
[]
"Many investors still are fearing deterioration in the
economy, and that's why this earnings season is so important.
It will illuminate what comes next from the view of
management," said Lawrence Creatura, portfolio manager at
Federated Clover Investment Advisors in Rochester, New York.
The earnings optimism on Tuesday also boosted shares of
other companies that will report earnings later this week,
including major banks. JPMorgan Chase & Co <JPM.N> gained 3.3
percent to $40.48, while Bank of America Corp <BAC.N> rose 3
percent to $15.67.
U.S. Senate Democrats appeared to nail down the votes
needed to pass a rewrite of financial regulation. If the bill
is passed, it could be a short term negative for the banking
sector, but for now the group shrugged it off, said Marc Pado,
U.S. market strategist at Cantor Fitzgerald & Co. in San
Francisco. []
The Dow Jones industrial average <> gained 146.75
points, or 1.44 percent, to 10,363.02. The Standard & Poor's
500 Index <.SPX> rose 16.59 points, or 1.54 percent, to
1,095.34. The Nasdaq Composite Index <> jumped 43.67
points, or 1.99 percent, to 2,242.03.
Even so, recent low volume suggests the market's longest
winning streak since mid-April could be running out of steam,
while the cost of protection in the options market against a
market drop keeps growing.
The S&P 500 Index <.SPX> is up about 8 percent from a
recent intraday low on July 1, though trading volume has been
lackluster. Volume in the past two sessions was the lightest of
the year and although Tuesday's volume fared better, it was
still below last year's average.
"It's raising new cautionary flags," said Scott Fullman,
director of derivative investment strategy at WJB Capital
Group.
Weak volume is generally viewed as an indication investors
lack conviction, but analysts noted volume has been lower since
the market started to rally in March 2009. Summer holidays can
also cause lighter trading.
COST OF PROTECTION
In the options market, a heavy put buying was detected in
an exchange-traded fund that tracks the S&P, indicating that a
trader is combining the leverage of options and ETF to obtain a
short-term insurance policy.
One investor snatched up July $35 puts on the ProShares
Ultra S&P 500 <SSO.P>, an exchange traded fund that delivers
double the performance of the S&P 500. The heavy purchase drove
premiums to jump from 32 cents to as high as 46 cents, said
David Russell, options strategist at optionMonster.com.
Volume surged to 19,624 contracts, more than nine times
open interest in the strike. The ETF rose 3.1 percent to
$36.42, up more than 13 percent from a week ago.
On the downside, Apple Inc <AAPL.O> slipped 2 percent after
a poor consumer guide review for its iPhone 4 amid complaints
about the device's reception. Apple was down at
$252.11.[]
"Some of the blogs out there were speculating there was
going to have to be a full iPhone 4 recall and since then
they've been defended by five houses on Wall Street," said Dave
Lutz, managing director at Stifel Nicolaus in Baltimore.
"I think the Street is anticipating Steve Jobs doing what
it takes to make it right and not have the image tarnished,"
said Lutz, who is long Apple.
About 8.55 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, below last
year's estimated daily average of 9.65 billion.
Advancers beat decliners 2,644 to 387 on the NYSE, while on
the Nasdaq, advancers beat decliners 2,244 to 442.
(Additional reporting by Angela Moon; Editing by Kenneth
Barry)
