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US STOCKS-Stronger earnings, weak dollar lift Wall Street

Published 10/20/2010, 11:07 AM
Updated 10/20/2010, 11:12 AM

* Boeing rises more than 2 percent after results

* Some technical measures of the S&P 500 weaken

* Indexes up: Dow 1 pct; S&P 0.9 pct; Nasdaq 0.9 pct

* For up-to-the-minute market news see [STXNEWS/US] (Updates to morning trading)

By Rodrigo Campos

NEW YORK, Oct 20 (Reuters) - U.S. stocks rose on Wednesday on stronger earnings and outlooks from the industrial sector and a decline in the U.S. dollar that sent commodities higher, lifting materials and energy shares.

Banks lagged the broader market on uncertainty over their earnings and the possible forced buybacks of soured mortgage bonds. A more than 10 percent drop in mortgage applications in the latest week also hurt the sector. For details see [ID:nNLLJLE6KT].

Bank of America Corp fell for the fifth day in six with the stock down nearly 15 percent in the past two weeks. It reached a low in morning trading of $11.21, its lowest since June 2009.

"Mortgage applications could be hitting (banks) because fundamentally there's problems there and there's not a lot of buyers," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.

Boeing Co shares rose 2.3 percent after the aerospace company and Dow component posted a quarterly profit that beat Wall Street's expectations and it boosted its full year forecast. For details see [ID:nN19134234].

Jankovskis said the declining greenback was leading to strength in commodities and lifting those stocks as investors look toward the Fed's Beige Book, expected at 2 p.m. (1800 GMT), for more clues on the expected printing of money by the U.S. central bank.

The S&P materials index <.GSPM> rose 2.1 percent, while the KBW Bank index <.BKX> fell 1.1 percent.

Indications the Federal Reserve will move to further ease monetary policy have been pivotal in a stocks rally that has lasted for almost two months.

The Dow Jones industrial average <.DJI> gained 114.02 points, or 1.04 percent, to 11,092.64. The Standard & Poor's 500 Index <.SPX> rose 10.57 points, or 0.91 percent, to 1,176.47. The Nasdaq Composite Index <.IXIC> climbed 20.89 points, or 0.86 percent, to 2,457.84.

The dollar dropped below 81 yen, near a 15-year low and extended losses against the euro after a report from a U.S. think tank suggested the Fed planned to boost growth by purchasing $500 billion in Treasury debt over six months.

Tuesday's stocks slide took the S&P 500 below a key technical barrier breached last week. If the index is unable to bounce back above 1,173 it could be considered a technical failure, a bearish signal that could trigger further selling.

The benchmark's daily moving average convergence-divergence, or MACD, triggered a sell signal, but a momentum gauge held in positive territory.

Daily trading volume has picked up in the last few sessions, with more than 9 billion shares moving on the New York Stock Exchange, the NYSE AmEx and Nasdaq in four of the last five days, above the year's average. (Editing by Padraic Cassidy)

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