Date Posted:09:45:08 10/25/09 Sun Author: DATA==McDonald's Subject: US Markets report Thursday October 22nd 2009
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US Stocks Rally On Earnings Reports
Travelers, McDonald's and 3M paced another round of better than expected earnings reports and helped the Dow Jones Industrial Average surge more than 100 points on Thursday.
For Thursday, the Dow Jones Industrial Average closed up 131.95 points (1.33%) to 10,081.31, reflecting its first gain in three sessions and a late rally that pushed the Dow back over the psychologically significant 10,000 level. Pacing the index, Travelers gained $3.68 (7.7%) to $51.70 after the commercial and personal insurance provider's third-quarter profit more than quadrupled on sharply lower catastrophic losses and improved investment returns. The company also raised its full-year earnings outlook.
Other companies at the forefront of the Dow's surge included McDonald's, up $1.17 (2%) to $59.50, and 3M, up $2.46 (3.2%) to $78.79. In its quarterly report, McDonald's third-quarter earnings rose 5.9%, while 3M also beat analysts' estimates as the diversified manufacturer again raised its full-year earnings view.
Rounding out the Dow's reporters, AT&T gained 16 cents (0.6%) to $26.10; although its third-quarter profit declined 1.2%, the earnings still topped Wall Street expectations.
For the Dow, its 1.3% gain on Thursday well outpaced the other two broad market indexes. The Standard & Poor's 500 closed up 11.51 (1.06%) to 1,092.91, while the Nasdaq Composite tacked on 14.56 (0.68%) to 2,165.29.
Since stocks have picked up from decades-long lows in the past seven months, industry bellwethers have rarely been at the front of the market's gains. Riskier small-capitalisation stocks paced much of the initial market surge, while other more nuanced sectors have taken turns leading the tape.
Stocks were strongest on Thursday late in the session, with another round of bellwethers reporting after the bell. In one heavily watched report, Amazon.com said its third-quarter earnings surged 68% as sales rose strongly across the board. The online retailer jumped 11% in after-market activity to $104.29.
For Australian ADRs listed on the NYSE, BHP Billiton increased 56 cents (0.76%) to US$73.98, Rio Tinto Plc rose 84 cents (0.43%) to US$198.26, ResMed strengthened 39 cents (0.79%) to US$49.66, Telstra Corporation advanced 20 cents (1.36%) to US$14.90, Telecom Corporation of NZ lost 13 cents (1.37%) to US$9.38 and Westpac increased $3.49 (2.88%) to US$124.73.
In economic news, in a sign of tough times for the jobs market, the number of US workers filing new claims for jobless benefits was up by 11,000 to 531,000 for the week ended Oct. 17, wider than the 4,000 jump expected by economists.
Prices of Treasuries maturing in seven years or more remained lower due to a rally in US stock markets, but shorter-dated maturities rebounded, defying the announcement of a record $123bn in government note supply in the coming week. At 7:45 AM (AEST), the 10-year Treasury note yield was 3.42% and the five year yield was 2.36%.
European shares fell sharply on Thursday, as investors got rattled after disappointing earnings reports from the technology sector and the prospect of China raising interest rates.
The pan-European Dow Jones Stoxx 600 index dropped 1% to 246.59 to pare year-to-date gains to 24%.
Technology firms were the worst-performing sector, as downbeat results from Ericsson, the world's largest network-equipment maker, soured sentiment. Ericsson shares fell 6.2% after the company said its third-quarter net profit fell on heavy restructuring charges and losses at handset joint-venture Sony Ericsson. Network-equipment sales at the company declined amid lower demand.
Shares of Alcatel-Lucent, an Ericsson rival, fell 2.5%, and chip maker Infineon Technologies fell 4.3%.
Gemalto shares dropped 10.8% after the digital security firm said that third-quarter sales declined 4% to EUR401m in a "more cautious marketplace."
On a regional level, the German DAX index lost 1.2% to 5,762.93, the French CAC-40 index dropped 1.4% to 3,820.85 and the UK FTSE 100 index fell 1% to 5,207.36.
Banks were also weak in Europe, with HSBC Holdings down 1.8% and Societe Generale down 2.3%.
Shares of Swiss banking group Credit Suisse fell 3.5%. The lender swung to a third-quarter profit of 2.35bn Swiss francs (US$2.33bn), helped by further inflows into its private-banking business as well as market-share gains in investment banking. Strong US investment banking results from companies such as JP Morgan and Goldman Sachs have inflated expectations for the sector.
Praktiker shares fell 6.6% after the German home improvement firm reported a 65% tumble in third-quarter net income.
Still, there were some bright spots.
Shares of Swiss food giant Nestle rose 1.4% after it recorded comparable sales growth of 3.6% as volumes grew and increased its share buyback program for the year.
Shares in mouse-maker Logitech outperformed the rest of the technology sector with a 2.8% rise. The firm’s second-quarter net profit dropped to $20.7m, from $72.3m but beat analyst expectations. Revenue was also better than analysts had forecast.
UK pub chains surged, with Enterprise Inns leaping 23% and Punch Taverns up 14.8% as the Office of Fair Trade decided not to pursue a complaint from an ale advocacy group about the beer buying practices of pubs.
On the FTSE 100, Rio Tinto dipped 40.00 pence (1.34%) to 2,935.00 pence and BHP Billiton declined 29.00 pence (1.59%) to 1,801.80 pence.
Asian share markets were mostly lower on Thursday, weighed by data showing China's economy grew at a slightly slower than expected pace in the third quarter.
The Shanghai Composite gave up 0.6% and Hong Kong's Hang Seng Index lost 0.5% after data showed the Chinese economy grew 8.9% in the third quarter from the same period last year. The expansion marked an acceleration from second quarter's 7.9% growth rate, but it was lower than the 9.1% forecast by some economists.
Elsewhere, Japan's Nikkei 225 Average closed down 0.6%.
New Zealand shares fell following Wall Street's negative lead and as the climb of the New Zealand dollar to fresh 15-month highs hit hopes of a strong economic recovery. The NZX-50 Index closed down 0.6%, or 20.17 points, at 3,201.70.
Base metals on the LME finished mixed. Aluminium fell $5 (0.25%) to $1,960 while copper weakened $30 (0.45%) to $6,610 and nickel dropped $420 (2.14%) to $19,230. Zinc rose $10 (0.45%) to $2,240 and lead shed $70 (2.86%) to $2,380. Comex copper was last quoted at 298.80 US cents per pound.
Spot gold was last quoted at $1,060. Comex gold futures declined $5.90 (0.55%) to $1,058.60. Spot silver was last quoted at $17.61.
Crude fell slightly with market participants taking profits, although a late-day weakening in the US dollar helped oil erase some of its earlier losses. West Texas Intermediate was last quoted at US$80.84 per barrel.
The euro strengthened after spending much of the day locked in a tight race against the US dollar, as rising US stocks erased concerns over a mixed bag of US economic data.
At 08:05 a.m. (AET) the US dollar was quoted at 0.6651 euros, 91.28 yen, 1.079 AUD and 60.16 pence.
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