U.S. Inflation and Output Rise, World Martkets Advance

Nichole Harper
17 Nov, 2015
New York City

U.S. market indexes advanced after inflation rose and manufacturing output in October expanded after declining for two months in a row. Sentiment on Wall Street was also bolstered after Wal-Mart and Home Depot reported better-than-expected earnings. European markets jumped nearly 2%.

[R][12:45 PM New York City, New York – U.S. market indexes advanced after inflation rose and manufacturing output in October expanded after declining for two months in a row. Sentiment on Wall Street was also bolstered after Wal-Mart and Home Depot reported better-than-expected earnings. European markets jumped nearly 2%.[/R]

Stocks traded higher in New York and U.S. consumer prices increased in October after falling for two months in a row and in addition manufacturing sector also expanded after shrinking for two month in a row.

The two reports on inflation and output supported the view that the Federal Reserve will raise rates sooner than later and may make the first move at a policy meeting next month.

The U.S. index of consumer prices in October increased 0.2% from September and for the year all item index before seasonal adjustment rose 0.2%.

The food index grew 0.1% and energy index gained 0.3% while gasoline index jumped 0.4% followed by sharply decline in August and September, the Department of Labor said.

October industrial production slid 0.2% and the production was unchanged from September. Manufacturing production rose 0.4% and mining output fell 1.5%. Utility output slid 2.5%, the U.S. Federal Reserve Bank reported.

Total industrial production in October rose 2.6% from a year earlier and capacity utilization for total industry fell to 77.5%.

On Wall Street, Tollbooth Strategy Index increased 55.85 or 0.5% to 10,834.72.

S&P 500 index rose 10.57 or 0.5% to 2,063.76 and the Nasdaq Composite Index gained 31.82 or 0.6% to 5,016.44.

Crude oil in New York fell 71 cents to $41.03 a barrel and gold declined $15.41 to $1,067.35 an ounce.

U.S. Movers

Home Depot Inc ((HD)) jumped 3.1% or $$3.71 to $124.58 after the home improvement retailer reported net sales in the third-quarter ending in October soared 6.4% from a year ago to $21.8 billion.

Comparable store sales in the quarter jumped 5.1% and for the U.S. comp stores sales advanced 7.3%.

Net income in the quarter surged 13.3% to $1.7 billion or $1.35 per diluted share compared to $1.5 billion or $1.15 per share from the same quarter last year.

Home Depot forecasted sales growth for the year of about 5.7% and comparable store sales to increase approx 4.9% and diluted earnings per share to surge 14% to $5.36.

Wal-Mart Stores, Inc ((WMT)) soared 4.3% or $2.50 to $60.37 after the everyday low prices retailer reported total revenues in the third-quarter ending in October fell 1.3% from a year ago to $117.4 billion.

U.S. Comparable store sales in the quarter rose 1.5% and the traffic increased 1.7%.

Net income in the quarter plunged 11% to $3.30 billion or $1.03 per diluted share compared to $3.71 billion or $1.15 per share from the same quarter last year.

Wal-Mart international sales in the quarter declined 11.4% to $29.8 billion and sales in Sam''s Club segment dropped 2.2% to $14.08 billion and comparable store sales gained 0.4%.

European Markets

European stocks rallied on Tuesday following a recovery of travel and leisure stocks and strength in the defence sector due to expectations for higher government spending.

Positive company updates and the Greece’s deal with international lenders also contributed to the positive sentiment.

In London trading, FTSE 100 index jumped 114.36 or 1.9% to 6,260.47 and in Frankfurt the DAX index advanced 208.82 or 1.9% to 10,921.62.

In Paris, CAC 40 index soared 114.21 or 2.4% to 4,918.52.

Investors expect more stimulus from the European Central Bank after comments from Peter Praet, the ECB''''s chief economist, reinforced the view that the bank will take action to boost the economy, in the environment of growing uncertainty.

Greece achieved preliminary deal with its international lenders on home foreclosures reform, thus easing the stalemate in its bailout program.

October inflation index in the UK were down 0.1%, compared to the same month a year ago, and were flat compared to September.

Separately, the department said UK producer prices index for all manufactured products declined 1.3% in October from the 1.8% decline in September.

easyJet Plc declined 4.2% to 1,709 pence after the U.K.-based low-cost airline reported revenues in the year ending in September jumped 3.5% from year ago to £4.67 billion.

Profit in the year soared 21.8% from a year ago to £548 million compared to £450 million and diluted earnings per share increased to 138 pence from 113.2 pence.

The discount airline forecasted the fuel bill for the fiscal 2016 to decline between £140 million and £160 million.

The company also doesn’t expect any lasting impact on its business following the recent terrorist attacks.

Liberty Global Plc, the international video, broadband, telephony and mobile services provider, offered to acquire smaller rival Cable & Wireless Communications Plc for £3.6 billion in stock and a special dividend.

The acquisition is part of the company’s efforts to expand its reach in the Latin America and the Caribbean.

The transaction is expected to close in the second quarter of 2016.

Cable and Wireless Communications Plc stock soared 6.7% to 78.71 pence on the news.

Asian Markets

The Nikkei index rebounded 1.2% following an Asian-wide rally after the U.S. indexes gained in an overnight trading.

On Wall Street the Dow Jones index jumped 1.4% and the S&P 500 soared 1.5%.

In Tokyo trading, commodities and resource sector stocks led the gainers after crude oil extended gains for the second day in a row and increased 2.2%.

Fuji Heavy lifted profit forecast for the next three years and JX Holdings is in talks to merge with the rival TonenGeneral Sekiyu before the end of the year.

The Nikkei 225 Stock Average jumped 236.94 or 1.2% to 19,630.63 and the broader Topix index increased 14.58 to 1,586.11.

The yen weakened to 123.43 against a dollar.

JX Holdings, Inc soared 3.4% to 498.50 yen after the petrochemical company is in talks to merge with the rival TonenGeneral Sekiyu K.K

The transaction is expected to complete by the end of the year.

Stocks on Mumbai trading gained following a rally in Asia after the U.S. indexes traded higher in New York close.

The central government is looking to shift its oil and natural gas exploration policy and a committee is likely to shift its next auction of 67 oil exploration blocks.

The committee is expected to recommend a shift to revenue share model with the explorer and bring more transparency in the capital expenditure and lift total output.

Rupee weakened 3 paisa to 66.02 against one U.S. dollar.

The Sensex Index increased 104.37 or 0.4% to close at 25,864.47. The CNX Nifty gained 30.95 or 0.4% to 7,837.55.

ICICI Bank plans to sell its 6% stake in ICICI Prudential Life Insurance and the software services provider HCL Tech secured a contract from Deutsche Bank.