Earnings Expectations Drive U.S. Stocks Higher

Mukesh Buch
19 Oct, 2009
New York City

U.S. benchmark indexes gained nearly 1%. Industrials, technology and retail stocks led the gainers. Dollar hovered near its recent lows. Gold and silver advanced. Crude oil and natural gas edged up. European markets closed higher.

[R]4:30 PM New York, 9:30 PM London, 6:30 AM Sydney – U.S. benchmark indexes gained nearly 1%. Industrials, technology and retail stocks led the gainers. Dollar hovered near its recent lows. Gold and silver advanced. Crude oil and natural gas edged up. European markets closed higher.[/R]

U.S. investors with earnings in focus lifted stocks in the industrial, consumer and retailing sectors. Gannett Co surged after it reported better than expected earnings. Eaton Corp gained after it estimated higher annual earnings and Daimler AG increased after it revised expectations for earnings and cash flows.

Stocks in the early afternoon traded higher. BB&T led the decliners in the S&P 500 index. Fannie Mae and Freddie Mac plunged on negative comments. Gannett, Eaton and Daimler increased on the earnings announcements.

Stocks in Japan closed lower ahead of earnings season. Casio Computer reversed its earlier forecast of annual profit to a net loss of 7 billion. The index of demand for services increased 0.3% in August. Steel output fell 29.6% in the first half to the lowest level last seen in 1969.

State controlled media and other economists are predicting third quarter economic growth in China at 9% ahead of the data release on October 22. The economic stimulus and rising bank lending and brisk real estate market is supporting the economic growth. Evergrande Real Estate in $800 million IPO.

Australian dollar continued its ascent against the dollar after comments from the Reserve Bank of Australia. Aussie dollar traded above 92 U.S. cents. Kathmandu Holdings plans to raise as much as A$375 million in a public offering. Energy Developments rejects A$415 million bid.

North American Markets

Dow Jones Industrial Average increased 96.28 or 1% to a close of 10,092.19, S&P 500 Index added 10.23 or 0.94% to 1,097.91, and Nasdaq Composite Index advanced 19.52 or 0.9% to close at 2,176.32. Toronto TSX Composite Index increased 33.63 to 11,538.39.

Of the stocks in S&P 500 index, 426 increased, 71 declined and 3 were unchanged.

AIG led the decliners in the S&P 500 index followed with a loss of 4.7% followed by losses at BB&T Corp of 4.3%, in at Hasbro Inc of 3.7% and at Huntington Bancorp of 3.71% and in SunTrust Banks of 2.9%.

IMS Health Inc led the gainers in the S&P 500 index with a rise of 21.6% followed by gains in Gannett Co of 8.2%, in Motorola Inc of 7.9%, in Caterpillar Inc of 6% and in Eaton Corp of 5.7%.

South American Markets Indexes

Mexico Bolsa Index increased 200.81 or 0.7% to 30,927.11 and Brazil Bovespa Stock Index advanced 1,038.96 or 1.6% to 67,239.45.

Argentina Merval Index closed fell 2.10% and Chile Stock Market Select index increased 0.28% and Colombia IGBC General Index increased 2% and Peru Lima General Index decreased 0.6%.

Europe Markets Review

In London FTSE 100 Index closed higher 91.30 or 1.76% to 5,281.54, in Paris CAC 40 Index increased 64.76 or 1.69% to close at 3,892.36, in Frankfurt DAX index higher 109.17 or 1.90% to close at 5,852.56. In Zurich trading SMI increased 91.11 or 1.44% to close at 6,436.37.

Asian Markets Review

The Nikkei 225 Index in Tokyo closed lower 21.05 or 0.21% to 10,236.51, Hang Seng index in Hong Kong increased 270.56 or 1.23% to 22,200.46, and CSI 300 index in China higher 87.45 or 2.70% to 3,329.16. ASX 200 index in Australia decreased 43.60 or 0.90% to 4,792.80. The FTSE Bursa KL Composite index in Malaysia was higher 4.72 or 0.38% to 1,261.49.

The Kospi Index in South Korea increased 8.71 or 0.53% to close at 1,649.07 SET Index in Thailand closed higher 14.49 or 2.02% to 731.61. JSE Index in Indonesia increased 5.12 or 0.20% to 2,520.92. Markets in India were closed today.

Commodities, Metals, and Currencies

Crude oil increased $0.83 to $79.36 a barrel for a front month contract, natural gas edged up 5 cents to $4.83 per mBtu and gasoline increased 0.08 cents to 198.01 cents.

Soybean future closed up 18.75 cents to $9.96 a bushel. Wheat futures closed up 19.00 cents in Chicago trading to $5.17 a bushel. Sugar closed up 0.26 cent 24.17 cents.

Gold increased $11.90 in New York trading to close at $1,063.10 per ounce, silver closed up $0.31 to $17.73 per ounce and copper for the front month delivery increased 11.05 cent to $2.956 per pound.

Dollar edged up against euro to $1.4942 and closed down against the Japanese yen to 90.62.

Yield on 10-year U.S. bonds decreased to 3.38% and with 30-year maturities decreased to 4.19%.