Wall Street Advances As Fed Signals December Rate Hike Likely

Nichole Harper
28 Oct, 2015
New York City

Federal Reserve left rates on hold but held out for a possible rate hike at the next meeting in December. The accompanying statement from the Fed suggested that the U.S. economy is healthy policy makers are less concerned about the global backdrop.

[R][4:30 PM New York City, New York – Federal Reserve left rates on hold but held out for a possible rate hike at the next meeting in December. The accompanying statement from the Fed suggested that the U.S. economy is healthy policy makers are less concerned about the global backdrop.[/R]

Market indexes on Wall Street closed higher after the Federal Reserve left interest rates unchanged.

Indexes dropped initially after the Fed released its statement but quickly recovered from the 1% drop. The wording of the statement also convinced more investors that the economy is healthy enough to withstand the possible rate hike in the near future.

Fed also held out for a rate hike at its next meeting in December and the central bank has not lifted rates nearly in a decade.

Separately, U.S. trade deficit in August widened by $6.5 billion to $48.3 billion from the revised $41.8 billion in June. Exports in August fell $3.7 billion but imports grew $2.8 billion from July.

The goods deficit increased by $6.6 billion and service surplus edged up $0.1 billion, the Department of Commerce said.

On Wall Street, Tollbooth Strategy Index increased 93.27 or 0.9% to 10,949.18.

S&P 500 index rose 13.24 or 0.6% to 2,079.12 and the Nasdaq Composite Index gained 35.12 or 0.7% to 5,065.06.

Crude oil in New York jumped 6% or $2.54 to $45.74 a barrel and gold advanced $9.87 to $1,176.75 an ounce.

U.S. Movers

Apple Inc ((AAPL)) jumped 2.3% or $2.66 to $117.22 after the pc and mobile and media devices maker reported revenues in the fourth-quarter ending on September 26 soared 22.3% from a year ago to $51.5 billion.

Net income in the quarter surged 30.6% to $11.1 billion or $1.96 per diluted share compared to $8.5 billion or $1.42 from the same quarter last year.

Revenues in America in the quarter jumped 8% to $21.8 billion and revenues in Greater China doubled to $12.5 billion from $6.29 billion in a year ago period. Revenues in Asia Pacific region soared 27% to $2.70 billion.

Apple said iPhone unit sales in the quarter surged 22.3% to 48 million units but sales of iPad tumbled 20% to 9.9 million units while unit sales in Mac rose 3% to 5.7 million units.

For the first-quarter, Apple forecasted revenue between $75.5 billion and $77.5 billion and gross margin between 39% and 40%.

Northrop Grumman Corporation ((NOC)) soared 5.5% or $9.91 to $190.58 after the security products maker said net sales in the third-quarter ending in September was nearly flat from a year ago to $5.98 billion.

Net income in the quarter jumped 9.1% to $516 million or $2.75 per diluted share compared to $473 million or $2.26 from the same quarter last year.

Separately yesterday, the company said the U.S. Air Force has selected to deliver the nation''s new Long-Range Strike Bomber, wining of Pentagon sweepstakes contract valued at as much as $80 billion to deploy Bombers in the mid-2020.

Twitter Inc ((TWTR)) slumped 4.2% or $1.31 to $30.04 after the social media services provider revenues in the third-quarter ending in September surged 57.5% from a year ago to $569 million.

Net loss in the quarter narrowed to $131.7 million or 20 cents per diluted share compared to $175.5 million or 29 cents from the same quarter last year.

Twitter average active monthly users in the quarter were 320 million from 316 million in the prior quarter, the slowest since its go public in 2013.

Twitter forecasted revenues for the fourth-quarter between $695 million and $710 million.

Walgreens Boots Alliance, Inc ((WBA)) tumbled 8.3% or $7.92 to $87.24 after the drug store chain said it would acquire smaller rival Rite Aid Corporation for $9 a share, a 48% premium to the closing price of $6.08 of Monday.

The companies reported the deal is worth about $17.2 billion, including debt and Walgreens is expected to close the deal in the second half of next year.

Rite Aid Corporation stock declined 6.8% to $8.09.

Separately, Walgreens today reported total revenues in the fourth-quarter ending in September soared 49.2% from a year ago to $28.5 billion.

Net in the quarter swung to profit $26 million or 2 cents per diluted share compared to a loss of $221 million or 23 cents from the same quarter last year.

For the year, Walgreens forecasted net diluted earnings per share in the range of $4.25 to $4.55.

European Markets

In London trading, FTSE 100 index jumped 72.14 or 1.1% to 6,437.41 and in Frankfurt the DAX index advanced 123.89 or 1.2% to 10,815.12.

In Paris, CAC 40 index increased 49.14 or 1% to 4,896.42.

BT Group Plc jumped 3.1% to 466.15 pence after the U.K.-based communications services provider received provisional approval from the regulatory authority to acquire mobile operator EE a subsidiary of Deutsche Telekom and Orange in a £12.5 billion or $19 billion unconditionally.

BT will control the largest high-speed broadband network as well as the largest wireless operator to sell package of mobile, TV, home phone and Internet services in the U.K.

GlaxoSmithKline Plc soared 3.7% to 1,417.65 pence after the U.K.-based healthcare company reported revenues in the third-quarter ending in September jumped 9% from a year ago to £6.13 billion.

Net profit in the quarter surged 34.2% from a year ago to £538 million compared to £401 million and diluted earnings per share increased to 11 pence from 8.2 pence.

Heineken N.V advanced 3.9% to €83.28 after the Netherlands-based brewing company said revenues in the nine-month period ending in September increased 3.9% from a year ago to €15.41 billion.

Net profit in the period soared 63.3% from a year ago to €1.78 billion compared to €1.09 billion.

Volkswagen AG jumped 3.2% to €108.55 after the Germany-based auto maker reported sales in the third-quarter ending in September advanced 5.3% from a year ago to €51.49 billion.

Net in the period swung to a loss form a year ago to €1.73 billion compared to profit of €2.93 billion diluted loss per share swung to €3.45 from diluted earnings per share of €5.84.

The passenger car maker set aside €6.7 billion to pay for recalling and fixing cars that were rigged to evade U.S. diesel emissions tests.

Chief Financial Officer Frank Witter said the company had ""solid and robust"" cash resources to meet the financial impact of the emissions scandal.

Asian Markets

Market averages in Tokyo gained and investors shifted attention to local earnings after ANA, Daiwa, Canon, Nomura and East Japan Railway reported earnings.

On the economy front, the retail sales in September dropped 0.2% followed by 0.8% increase in August, the Ministry of Economy, Trade and Industry said.

On a seasonally adjusted basis, retail sales in September jumped 0.7% from the previous month.

The Nikkei 225 Stock Average gained 125.98 or 0.7% to 18,903.02 and the broader Topix index added 4.08 to 1,547.19.

The yen strengthened to 120.43 against a dollar.

Fujifilm Holdings Corp jumped 1.1% to 4,772 yen after the films, digital cameras, optical devices maker reported net sales in the first-half ending in September jump 3.6% from a year ago to 1.23 trillion yen.

Net income in the period soared 15.8% to 46.95 billion yen compared to 40.55 billion yen and diluted earnings per share increased to 98.52 yen from 83.89 yen.

The company forecasted net sales for the year to advance 3.5% to 2.58 trillion yen and net income to increase 1.2% to 120 billion yen.

Nomura Holdings, Inc increased 1.1% to 787 yen after the financial services provider said net sales in the first-half ending in September fell 2.2% from a year ago to 912.97 billion yen.

Net income in the period plunged 30.1% to 72.73 billion yen compared to 115.30 billion yen and diluted earnings per share dropped to 19.34 yen from 31.26 yen.

The company forecasted net sales for the year to increase 1.5% to 860 billion yen but net income to plummet 13.9% to 53.50 billion yen.