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News at a Glance

• Inside the Fed: Recession to end soon.
• Major Indexes: Big gains retained across the board.
• Crude Climbs: Oil pumps past $61 a barrel.

The Lowdown

Major indexes had a strong showing as traders looked to continued positive earnings news, as tech and financial shares propelled a 257-point rally in the Dow.

Stocks opened strong after component Intel (INTC) announced better than expected results and offered a healthy outlook for the current quarter and beyond.

The Dow Jones Industrial Average closed up 257 points at 8616. Traders said a short squeeze in advance of major financial firms’ earnings contributed to the sharp uptick. The Nasdaq climbed 63 points to 1863 and the S&P 500 climbed 27 to 933.

The 2 p.m. release of last month’s Federal Open Markets Committee meeting notes showed the Fed still views the economy as fragile, but that it has an exit strategy in place for its heavy interventionist course. The committee said it expected the 18-month recession to be over “before long,” but also that “the global nature of this recession meant that growth abroad was not likely to bolster U.S. exports and so contribute to a recovery in the United States.” The Fed also most government backup liquidity programs “could be extended into early next year.” REPORT

Adjusting for one-time charges, the chip maker reported second-quarter net income of $1.0 billion, or 18 cents a share, down from $1.6 billion, or 28 cents a share, in the year-ago period but well above analysts’ estimates of 8 cents a share. The company also forecast third-quarter revenue above analysts’ projections.

Earnings keep rolling in as investors look for signs of growth and improving performance beyond cost cutting measures. Companies secheduled to report earnings Thursday include JPMorgan Chase (JPM), Google (GOOG), IBM (IBM) and Nokia (NOK). 

Brazilian stocks hit a two-month high on metals and oil producer stock gains. European markets closed up Wednesday. Asian markets also gained as tech stocks like Samsung and Hynix Seminconductor advanced after Intel’s outlook. 

In commodities, oil prices rose after a Department of Energy report showed a larger than expected drawdown of 2.8 million barrels of crude. That followed the American Petroleum Institute report late Tuesday that showed a drop in U.S. gasoline stockpiles. Crude traded on the Nymex was up 20 cents in afternoon trading at $61.74 a barrel. REPORT

Gold also gained as investors hedged against a weakening dollar.

Corporate News

• Intel (INTC) lost $398 million or 7 cents a share, during the second quarter, compared with a profit of $1.6 billion, or 28 cents a share, in the year-ago period, the company said late Tuesday. Adjusting for a $1.45 billion fine by the European Union, the firm earned 18 cents a share on revenue of $1.45 billion. Analysts had expected the company to earn 8 cents a share on revenue of $7.3 billion. RELEASE
• Yum Brands (YUM) also reported a positive quarter on Tuesday, posting earnings of 45 cents a share, ahead of Wall Street estimates of 43 cents a share. It maintained its full fiscal year forecast despite a 1% drop in U.S. same-store sales. RELEASE
• Rick Wagoner, the former General Motors chief executive, will received a retirement package of $8.2 million in benefits, not including a life insurance policy, or its current cash equivalent, of $2.6 million, according to a filing with the Securities and Exchange Commission Tuesday. Wagoner was ousted from GM by the Obama administration in March as part of its plan to turn the automaker around.
• Regulators worked to hammer out a rescue plan for CIT (CIT) as depositors withdrew hundreds of millions of dollars from the ailing lender, Trading was halted on the stock around 3:20 p.m. Wednesday. The Wall Street Journal reported Wednesday, citing anonymous sources. The plan, as tentatively designed, would reportedly allow CIT to transfer assets from its holding company to its bank. Some of the assets would then be used as collateral at the Federal Reserve’s discount window, and CIT would work to refinance its existing debt.

The Economy

• The Consumer Price Index rose 0.7% in June, compared to an increase of 0.1% in May,  the Labor Department announced Wednesday. The index, an inflation indicator, was expected to have risen 0.6%. The core index, which excludes volatile food and energy prices, rose 0.2%, compared to an increase of 0.1% in May. The core index was expected to have risen 0.1%. REPORT
• The Empire State manufacturing index climbed to a higher-than-expected -0.6 in July, the New York Federal Reserve reported Wednesday. The index, which measures business conditions for New York manufacturers, was expected to have fallen to -5.00, compared to a reading of -9.41 in June. REPORT
• The June report on industrial production is scheduled to be released by the Federal Reserve at 9:15 a.m. Industrial production is expected to have fallen by 0.6%, compared to a decline of 1.1% in May. The rate of capacity utilization, a reflection of slack available in the economy, is expected to have slipped to 67.9%, compared to a rate of 68.3% in May.
• The Energy Department reported crude inventories fell by 2.90 million barrels in the week ending July 3 but remained above the upper boundary of the average range for this point in the year. REPORT

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