US stocks surge for 4th day, optimism grows

US stocks advanced for a fourth day in a row as companies expect to post highly positive earnings which supports arguments the economy is strong enough to sustain itself after a possible stimulus tapering. The benchmark index gained 2.4% for four days as positive employment data. Investors would be provided with more data after todays statement.

The Standard & Poor’s 500 added 0.7% to 1,652.32 in New York, the highest in more than a month. The Dow Jones Industrial Average rose 0.5%, to 15,300.34 today. More than 5.8 billion shares traded hands on U.S. exchanges today, or 8.1% below the three-month average.

The International Monetary Fund yesterday lowered its projection of 2013 US growth to 1.7% from 1.9%. The IMF said global growth will struggle to accelerate as U.S. expansion weakens, China’s economy levels off and Europe’s recession deepens.

Investors are now focusing on to earnings reports from J.P. Morgan Chase and Wells Fargo at the end of the week, according to Peter Jankovskis, co-chief investment officer at OakBrook Investments who said to Wall Street Journal: “Financials are what got us into a mess five years ago, and they are still very closely watched,” he said. “The Alcoa report was a positive but not particularly great,” said Mr. Jankovskis. “If Alcoa had beaten on revenues, the market would like it a lot more.”

Alcoa was the first member of the Dow to release results, decreased 0.1% to $7.91. The largest U.S. aluminum producer said profit excluding one-time items was 7 cents a share, beating forecast with 1 cent a share. Sales fell to $5.85 billion, also exceeding the $5.79 billion average of nine estimates.

FedEx jumped 4.4% due to speculation that it may become investment target of William Ackman’s Pershing Square Capital Management LP.

In more corporate news, Tesla Motors Inc. added another 1.5% to its share price. The maker of electric cars will join the Nasdaq-100, replacing Oracle which is moving to New York Stock Exchange.

Barnes & Noble rose 5.4% after the U.S. bookstore chain said Chief Executive Officer William Lynch resigned. The company promoted Chief Financial Officer Michael Huseby and CEO of Nook Media, making him Barnes & Noble’s most senior executive.

IBM dropped the most in Dow Jones Industrial. The company lost 1.9% after Goldman Sachs Group downgraded its stock to “neutral” from “buy” rating.

Kroger, the largest U.S. grocery chain, jumped 2.7% to $37.15 after saying it will buy Harris Teeter stores in a deal valued at $2.5 billion. The smaller regional chain added 1.5% to $49.26.