Wall Street surges on US company earnings
US stocks rebounded from two days of losses to close higher on Thursday, helped by financial
sector earnings, while stronger-than-expected economic data boosted the dollar and bond yields.
The dollar was up 0.5 per cent after a three-day slide against a basket of currencies, on track for its biggest gain since September 30. after a rise in September core US consumer prices. The data also pushed up US Treasuries yields slightly, as it renewed some hopes for a 2015 Federal Reserve interest rate hike.
In addition, the number of Americans filing new applications for unemployment benefits fell back to a 42-year low last week, suggesting the labour market remained strong despite an abrupt slowdown in job growth in the past two months.
“It’s a stronger economy day. Unemployment claims were very good at the lowest in 42 years, suggesting the labour market is OK,” said Daisuke J. Nakajima, managing director and economist
at Evercore ISI Group in New York.
US stocks were helped by strength in some third-quarter earnings reports, led by the benchmark S&P 500’s financial sector, which closed up 2.3 per cent for its best day in more than a month. Citigroup was a big driver with a 4.4 per cent rise after it beat estimates.
Of the companies that reported earnings so far this season, 67 per cent have exceeded analyst estimates, compared with 49 per cent in a typical quarter, according to Thomson Reuters data.
But Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis, said the stocks boost was just a rebound, as none of the fundamentals “have been decisive enough to take you away from the technical battle that’s going on.”
The Dow Jones industrial average rose 217 points, or 1.28 per cent, to 17,141.75, the S&P 500 gained 29.62 points, or 1.49 per cent, to 2,023.86 and the Nasdaq Composite added 87.25 points, or 1.82 per cent, to 4,870.10.
“There’s a lot of cash on sidelines, and we did break through to a new high since the August decline,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.
Oil prices settled down for the fourth straight day as the US government reported a larger-than-expected crude stockpile build. However, after settling down 0.6 per cent at US$46.38, though above its session lows, US crude rose 0.3 per cent in late trade, helped by the equities rally.
“We were trading according to supply-demand fundamentals earlier in the day. But toward the close, it was the risk-on, macro trade, with money flowing into riskier assets such as stocks and commodities,” said Chris Jarvis, analyst at Caprock Risk Management in Frederick, Maryland.
Brent oil futures settled down 0.9 per cent at $48.11 a barrel. Other commodities were mixed, with gold
down 0.2 per cent while copper was up 0.2 per cent.
MSCI’s emerging share index was up 1.8 per cent after a two-day fall and hit its highest level since August 13.
“People’s fears of a global slowdown are maybe bottoming out,” Paulsen said.