* Airline stocks surge after earnings
* Materials shares boosted by commodities, lower dollar
* Indexes up: Dow 1.2 pct; S&P 1.1 pct; Nasdaq 0.8 pct
* For up-to-the-minute market news see []
(Adds comparison with Tuesday's volume in penultimate
paragraph)
By Edward Krudy
NEW YORK, Oct 20 (Reuters) - Wall Street bounced back on
Wednesday as a fall in the dollar spurred buying in industrial
and commodity-linked shares, while another batch of strong
corporate earnings added to gains.
Equities and the greenback have had an inverse relationship
lately because the Federal Reserve's ultra-low interest rate
policy has led investors to buy riskier assets like stocks and
commodities.
"The correlation has come back strongly and much of that
has to do with the Fed and the promise of asset purchases,"
said Quincy Krosby, market strategist at Prudential Financial
in Newark, New Jersey.
The euro and the popularly traded S&P E-mini futures
contract have tracked each other closely in the last month. In
the last 22 sessions, they have had a positive correlation
coefficient of 0.8, implying a very strong relationship between
the two.
Volume was in roughly in line with the average for the year
so far but was below Tuesday's high volume selloff.
The Dow Jones industrial average <> gained 129.35
points, or 1.18 percent, to 11,107.97. The Standard & Poor's
500 Index <.SPX> rose 12.27 points, or 1.05 percent, to
1,178.17. The Nasdaq Composite Index <> added 20.44
points, or 0.84 percent, to 2,457.39.
Materials shares led the broad market higher.
Freeport-McMoRan Copper & Gold <FCX.N> gained 2.8 percent to
$95.35 and the S&P materials index <.GSPM> rose 2 percent.
Commodities gained as the U.S. dollar dropped to a near 15-year
low against the yen.
The Boeing Company <BA.N> gave the biggest boost to the
Dow, up 3.3 percent at $71.36. The company reported a quarterly
profit that beat expectations and raised its full-year
forecast, helped by a recovery in the commercial airplane
market. For details, see [].
Delta Air Lines <DAL.N> and US Airways Group <LCC.N> jumped
after they reported strong profits. Delta surged 10.9 percent
to $12.97 and US Airways jumped 7.4 percent to $10.84.
[][]
After the dollar's rise on a surprise Chinese interest rate
hike on Tuesday, the currency's change of fortune prompted a
snap-back in stocks.
Eaton Corp <ETN.N> was among major industrial companies
that raised their profit forecasts for the rest of the year,
sending its shares up 4.1 percent at $86.82. []
Earnings from financial companies were mixed. Wells Fargo &
Co <WFC.N> reported higher earnings, but Morgan Stanley <MS.N>
reported a surprise loss. [] []
Wells Fargo rose 4.3 percent to $25.60, while Morgan
Stanley fell 0.04 percent to $25.38. US Bancorp <USB.N> rose
0.1 percent to $22.83 after reporting higher earnings.
Regional banks weighed on the KBW Bank Index <.BKX>, which
was off 0.5 percent. Marshall & Ilsley Corp <MI.N>, Wisconsin's
largest bank, reported a larger-than-expected loss, sending its
shares down 10.2 percent to $6.24. []
Much of Wall Street's gains since the end of the summer
have come from expectations the Federal Reserve will act to
bolster the economy.
Keeping those expectations alive, the Fed said in its Beige
Book that the U.S. economy grew sluggishly in recent weeks,
with scant inflation pressures, adding that employers were
reluctant to hire or invest. [].
About 8.58 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and the Nasdaq -- below
the year's average so far of about 8.77 billion. Volume in the
last session was 9.85 billion.
Advancing stocks outnumbered declining ones on the NYSE by
a ratio of about 3 to 1. On the Nasdaq about five stocks rose
for every two that fell.
(Reporting by Edward Krudy; Editing by Kenneth Barry)
