Jacob Zamansky, Zamansky & Associates, offers insight on Vikram Pandit's exit at Citi. Paul Argenti, Dartmouth Tuck School of Business, weighs in.
By NBC News wire services
Updated at 4:10 p.m. ET: Stocks rallied strongly Tuesday after stronger-than-expected quarterly earnings from such bellwethers as Goldman Sachs and Johnson & Johnson helped ease concerns about a dismal quarterly earnings season.
The Dow Jones industrial average closed the day up 128 points, near the highs of the day.
Dow components Johnson & Johnson and UnitedHealth Group both raised their full-year profit views while Goldman Sachs increased its dividend.
Goldman Sachs shares gained after the banking company posted earnings that beat expectations and revenue that more than doubled. Goldman's results followed earnings in the two previous sessions from Citigroup Inc, JP Morgan Chase & Co and Wells Fargo.
Shares of Johnson & Johnson, the diversified U.S. healthcare company, rose. In contrast, UnitedHealth fell.
The market?s advance comes on the heels of last week's 2.2 percent slide. That was the benchmark index's worst weekly decline in four months as investors looked for more evidence on the global economic climate from large multinational companies.
"One of the biggest things coming into this earnings reporting season was this drumbeat for how bad it was going to be," said Art Hogan, managing director of Lazard Capital Markets in New York.
"We went through a period of time last week where we focused on how bad it was going to get, and we've got a chance to get some of that back because the worst-case scenario is not playing out."
Coca-Cola Co also reported a rise in earnings, but quarterly revenue came in short of Wall Street's expectations, hurt by declines in Europe and Asia.
Citigroup unexpectedly announced that Chief Executive Vikram Pandit has resigned effective immediately, along with Chief Operating Officer John Havens. Michael Corbat, previously chief executive for Europe, Middle East and Africa, was named to succeed Pandit.
The announcement came one day after a surprisingly strong quarterly earnings report.
"It certainly is a bit of a shock," said Jeff Morris, head of U.S. equities at Standard Life Investments in Boston. "Certainly the transitioning and the messaging was more abrupt than I think anybody would have anticipated."
As earlier profit warnings from large multinationals left investors leery of the third-quarter earnings season, Tuesday's earnings helped decrease concerns about the global economy. Materials stocks, closely tied to economic fortunes, were the S&P 500's best performers.
Quarterly profits of S&P 500 companies are seen dropping 2.3 percent from the year-ago period, according to Thomson Reuters data through Tuesday morning. With about 10 percent of S&P companies having reported, 60 percent have topped profit expectations, under the average beat rate of 67 percent for the past four quarters.
Economic data showed the overall U.S. Consumer Price Index rose 0.6 percent in September as the cost of gasoline surged, posing a threat to consumers' spending power. On the other hand, inflation pressures look unlikely to derail the Federal Reserve's ultra-easy policy path.
Reuters contributed to this report.
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