Investors put pedal to the metal as Alcoa earnings propel stocks

NEW YORK — Traders on Wednesday all but forgot the previous day’s burdens and sent stocks soaring. It was a stark turnaround from the day before, when they’d pushed the market into a free-fall on worries about European debt and corporate earnings in the U.S.

Those fears about problems festering on both sides of the Atlantic were calmed thanks to a surprising profit from Alcoa and news that borrowing costs in Spain had edged down, a potential sign that investors have more faith — for now, anyway — in that country’s financial health.

The result was a U-turn on Wall Street. The Dow Jones industrial average climbed as much as 129 points in early trading before settling at 12,805.39, up 89.46 points, or 0.7%. The previous day, it had lost 214 points, the cap to its biggest and longest losing streak this year.

Other indexes also erased a good share of the previous day’s losses. The Standard & Poor’s 500 rose 10.12 points, or 0.7%, to 1368.71 after losing 24 points the day before. The Nasdaq composite climbed 25.24 points, or 0.8%, to 3016.46 following a 56-point loss Tuesday.

European markets rose, too. Stocks climbed roughly 1% in major capitals, excluding Greece, after losing 2% to 3% the day before.

Alcoa rose 58 cents to $9.90 after reporting late Tuesday that it turned a profit in the first three months of the year and handily beat the expectations of Wall Street analysts, who were predicting a loss. Since Alcoa is the first company in the Dow average to report earnings, its results have a greater ability to move the market compared with companies that report later. More first-quarter results will be released over the next few weeks.

Market watchers were divided over how long the gains would last and what Alcoa’s profit means for the rest of the earnings season. “I’m not predicting we’re going to have a blowout earnings quarter,” says David Armstrong, managing director of Monument Wealth Management. “But I think if people thought earnings season was going to be bad, they may be pleasantly surprised.”

“One earnings report?” counters Uri Landesman, president of Platinum Partners. The boost “will last until the first bad number.”

Wednesday still didn’t make up for the market’s second-quarter losses. Wednesday was just the second gain for the Dow in the seven trading days this quarter. The Dow was up 8% at the end of the first quarter, but down 3% since then.