April 16 - Summary: Stocks rally across the board with Federal Reserve Chair Janet Yellen hinting rates will continue to stay low and better-than-expected data out of China; Google, IBM profits disappoint. Conway G. Gittens reports.
The S&P 500 is back in the green for the year as economic data out of China came in hotter than expected. Adding to the gains: clarity on the possible timing of the first Federal Reserve rate hike. Stocks rally for a third day in a row; something not seen since the beginning of April. Fed Chief Janet Yellen laid the groundwork for the first rate increase by the Federal Reserve, saying unemployment should be down and inflation up to the Fed's expected target by 2016. That's a long time away, says Keith Bliss, Senior VP at Cuttone. SOUNDBITE: KEITH BLISS, SENIOR VP/DIRECTOR OF SALES AND MARKETING, CUTTONE (ENGLISH) SAYING: "I think what's interesting about her comments though is how they've become more dovish over the last couple of months and she's now trying to indicate to the market: everybody stay calm, the Fed will stay there, they will backstop the economy and as a result they will backstop the market." Data out of the U.S. were also market friendly. Industrial production - up for the second month in a row; housing starts - up in March, but well below the post recession high. Housing, however, may be on the mend. Mortgage applications jumped month-over-month, according to the Mortgage Bankers Association. The economy as a whole, improving as the weather improves, according to the Fed's summary of economic conditions known as the Beige Book. But as Yellen said in her speech, the economy is still far from full potential. Earnings at Google, excluding special items, were disappointing. Google's first quarter sales also disappointing because the price for its online ads continue to fall. Sales at International Business Machines also did not live up to expectations. Weak hardware sales overpowered software sales. And profits at American Express were ahead of estimates. Revenues were up as consumers used their credit cards more, but not by as much as forecast. Do-it-yourself soda company Sodastream, looking to sell up to a 16 percent stake, according to an Israeli financial newspaper. Shares jumped 8 percent. Possible suitors named, but not confirmed by Reuters, Pepsi, Dr. Pepper Snapple Group and Starbucks all moved higher. In Europe, stocks bounced higher as global economic optimism trumped Ukraine concerns.