It seemed pretty clear for a few months now that the uncertainty in Europe was really scaring investors, who were looking for any reason to buy. Now, we have proof. The S&P 500 (INDEX: ^GSPC) soared 1.65%, and the Dow Jones Industrial Average (INDEX: ^DJI) added 1.67% in a huge bounce-back day for the markets, behind soothing comments from Europe Central Bank head Mario Draghi.
He promised to save the euro at all costs, guaranteed that measures “will be enough,” and settled the widespread doubts that the European woes could sink the markets. But, just like the three straight days of big losses did not mean a return to 2008-level prices, this recovery does not mean the end of a crisis. Citigroup now sees a Greek Euro exit at 90%, and the Midwest drought is starting to hit insurance companies, as well as farmers and food-related businesses. In the end, it’s just another indication that a buy-and-hold strategy will reward investors in the long term.
Three winners
Telecom lightweights won big today. The industry already got a jolt from big players AT&T and Verizon – both companies posted solid earnings – and, today, Sprint (NYSE: S) and Metro PCS provided more of the same. Sprint continues to lose money, but it dramatically increased operating income guidance for the year, up to $4.5 billion to $4.6 billion from $3.7 billion to $3.9 billion. Much of the losses came from short-term factors, such as accelerated depreciation and capital expenditures that could actually generate more earnings in the future. MetroPCS shares jumped almost 37% on the day, while Sprint saw 20% gains.
The shares of cloud platform provider Akamai Technologies (Nasdaq: AKAM) shot up 24%, as the company beat expectations on its earnings report. The company grew revenue by 20% year over year, and beat analyst earnings expectations fairly handily. It reported an EPS of $.43 against expectations of $.37, and received an outperform rating from William Blair upon coverage initiation as a reward.
Finally, Western Digital (Nasdaq: WDC) also popped after its earnings release. Shares gained about 21% after the company smashed expectations, posting an EPS 16% higher than expectations at $2.87. The company also grew revenue almost 100% from the year-ago quarter, raising hopes that hard drive providers could thrive despite global economic woe and the slowing growth of PCs, and move toward solid state drives.
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