12:30PM New York – U.S. stocks rallied on earnings report from banks and benign inflation.

U.S. stocks surged on earnings from Coca Cola, Wells Fargo and JP Morgan, Intel and among others.

S&P 500 index rose 1.3%, Nasdaq increased 2.1% and Dow Jones Average increased 1.3%. The broad rally was sparked after JP Morgan reported earnings that met analysts’ expectations.

Economic news

U.S. new homes starts in March fell to annualized 947,000, 16-year low according to the data reported by the Commerce Department. Building permits in the month fell 40% from a year ago to 927,000 or 6% lower from February. Housing completions in the month declined 24.5% to 1.25 million or fell 2.7% from February.

The Federal Reserve reported industrial production increased 0.3% after decreasing at a revised ate of 0.7% in February. In the first quarter, output declined at annual rate of 0.1% after gaining 0.4% in the fourth quarter.

Bureau of Labor Statistics reported seasonally adjusted consumer price index in March increased 0.3% after staying flat in February. For the first three months the annual rate was 3.1% compared to 4.1% rise in 2007.

U.S. crude oil inventories declined 2.3 million barrels to 313.7 million barrels, gasoline inventories fell 5.5 million barrels and distillate fuel inventories rose 0.1 million barrels at the end of the last week.

Stocks surge on earnings

JP Morgan (JPM: chart) stock added $1.77 to $43.89, Wells Fargo (WFC: chart) increased $1.61 to $29.43, Intel (INTC: chart) edged higher $1.24 to $22.16 and Coca Cola traded up 8 cents to $61.02. CSX added $2.60 to $60.42 after it reported first quarter earnings of 85 cents per share.

Steel stocks rallied.

Steel stocks rallied after Arcelor Mittal was reported to plan to increase steel prices in the U.S. by $250 million tons. Bloomberg news cited an internal memo talking about price increase.

123jump.com first reported that the European automakers ad Chinese companies expect steel price hikes, yesterday. International Steel Institute and Chinese industry group expect steel consumption to rise in 2008.



Earnings releases

JP Morgan reported first quarter 2008 net income of $2.4 billion or 68 cents per share compared to $4.8 billion or $1.34 per share a year ago. Net revenue in the quarter declined 9% to $17.9 billon.

Noninterest revenue of $8.5 billion was down $3.7 billion, or 31%, due to lower principal transactions revenue, which reflected markdowns on prime and Alt-A mortgages and markdowns on leveraged lending funded and unfunded commitments.

Wells Fargo & Company reported record revenues in the first quarter ended March 2008 of $10.6 billion, 12% or $1.1 billion higher from a year ago.

For the quarter net income was $2.0 billion or $ 0.60 per share compared with $ 2.20 billion or 0.66 per share in the same quarter last year and $ 1.36 billion or $ 0.41 per share for the fourth quarter 2007.