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Investors battered by months of bad news about credit markets and the economy got good news from Intel late Tuesday when the chip giant met Wall Street estimates and predicted better times ahead.
Intel's earnings of 25 cents a share were in line with analysts' expectations, as falling memory prices and flat microprocessor prices held gross margins to 53.8%, good enough for a four-point improvement. Sales were up 9% to $9.67 billion, beating $9.63 billion estimates.
Intel forecast second-quarter sales of $9-$9.6 billion, potentially ahead of $9.23 billion estimates, and an improvement in gross margins to 56% for the first quarter and 57% for the year, both better than expected.
"Our first quarter results demonstrate a strengthening core business and a solid global market environment," Intel CEO Paul Otellini said in a statement. "We saw healthy demand for our leading-edge processors and chipsets across all segments. Looking forward, we remain optimistic about our growth opportunities as we continue to reap the benefits of our 45nm technology leadership."
Intel shares rose 7% in after-hours trading, sending Nasdaq futures more than 1% higher.
Stocks rose during the day ahead of Intel's results, as optimism ahead of earnings reports outweighed an unexpected spike in wholesale inflation.
IBM and eBay were mixed ahead of their results due out late Wednesday, with eBay up and IBM slightly lower. AMD, which reports Thursday night, lost 1%.
Infosys and Adtran rose on their results, while Avnet and Novatel fell on their outlooks.
Sigma Designs fell 25% after a Baird analyst said Broadcom beat the company out on a Motorola contract.
The Nasdaq rose 10 to 2286, the S&P added 6 to 1334, and the Dow gained 60 to 12,362. Volume rose to 3.54 billion shares on the NYSE, and 1.89 billion on the Nasdaq. Decliners led by an 18-12 margin on the NYSE, and 15-13 on the Nasdaq. Upside volume was 62% on the NYSE, and 58% on the Nasdaq. New highs-new lows were 61-85 on the NYSE, and 36-193 on the Nasdaq.