Second Weekly Gains in U.S. Index, Earnings, Confidence Drives Rally

Bikram Pandey
27 Apr, 2012
New York City

U.S. markets closed higher and closed up for the second week in a row after investors focused on improved consumer confidence and better than expected earnings. Bank of Japan expanded its programs to buy stocks and real estate securities and bond yields rose in Europe but in fell in New York.

[R]4:00 PM New York – U.S. markets closed higher and closed up for the second week in a row after investors focused on improved consumer confidence and better than expected earnings. Bank of Japan expanded its programs to buy stocks and real estate securities and bond yields rose in Europe but in fell in New York.[/R]

U.S. indexes gained after consumer confidence rose and corporate earnings were ahead of expectations but market gains were tempered after economy expanded less than estimated in the first quarter.

For the week, the S&P 500 index added 1.8% and the Nasdaq index gained 2.3%.

On the earnings front, Amazon first quarter net declined 35% and Kindle stores boost the revenue. Chevron first quarter net rose 4.2% to $6.47 billion. Ford Motor first quarter net plunged 45%. P&G third quarter net slumped 16% to $2.41 billion. Starbucks second quarter net rose 18.5% to $309.9 million and lifted annual outlook.

However, market sentiment in Europe was more cautious. The latest release of the confidence index in the euro zone offered another evidence of economic slowdown in the region and Spain said unemployment soared to 24.4%, the highest in the region. Bond yields of Spain and Italy advanced for the second week in a row as the governments race to complete 60% of annual debt target.

The European indexes advanced and yields for Spanish and Italian bonds rose. Ireland-based Jazz Pharmaceuticals agreed to acquire EUSA Pharma for $700 million. Earnings at BASF fell 29% but Daimler AG net rose 29% and Sanofi SA net jumped 50%.

Stocks in Tokyo closed down after an early rally faded. Bank of Japan expanded its risky asset purchase program by $124 billion as anticipated. Softbank surged more than 3% after it hiked dividend and reported a surge in operating profit.

Stocks in Australian edged lower after international worries overshadowed domestic news. Sundance Resources gained after it signed a deal with Cameroon government. The troubled printer PMP may pursue a highly conditional offer.

Commodities, Bonds and Currencies

The yields on 10-year U.S. bond decreased to 1.93% and 30-year U.S. bond edged lower to 3.11%.

The U.S. dollar edged lower to $1.3231 to one euro and inched lower against the Japanese yen to 80.36 yen.

Immediate delivery futures of Texas crude oil increased 19 cents to $104.74 a barrel and Brent crude futures fell 42 cents to $119.50.

In New York trading, futures of natural gas increased 0.07 cents to $2.19 per mbtu and gasoline price added 1.76 cents to 319.95 cents a gallon.

In metals trading, copper gained 5.6 cents to $3.83 per pound, gold added $3.50 to $1,663.70 per ounce and silver increased 7 cents to $31.35.