BackWall Street rebounds as corporate news offsets Italy
Wall Street rebounds as corporate news offsets Italy
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New York: US stocks bounced back on Thursday from the previous session’s steep losses as investors latched onto positive corporate and economic news, in the absence of a clear worsening in Europe’s debt crisis.
A brighter picture came from US companies. Merck raised its dividend and Cisco reported strong earnings, reinforcing the view that corporate America is showing strength even as problems in Europe weigh on investors’ minds.
Italy paid sharply higher rates for its one-year borrowing, but not as much as some had feared. French bond yields surged amid worries over the country’s credit rating.
Standard & Poor’s later blamed a technical error for the distribution of a message suggesting it had downgraded France’s credit rating. S&P said that was not the case and began an investigation of the matter.
“Our domestic market is solid and showing signs of improvement, but we’re not strong enough to ignore what’s going on in Europe," said Randy Frederick, director of trading and derivatives for Charles Schwab in Austin, Texas.
“Until we see a viable plan to stabilize Europe, we’re going to be hinging on an hourly basis on what’s coming out of there. I don’t see this going away any time soon."
The Dow Jones industrial average was up 112.92 points, or 0.96%, at 11,893.86. The Standard & Poor’s 500 Index was up 10.60 points, or 0.86%, at 1,239.70. The Nasdaq Composite Index was up 3.50 points, or 0.13%, at 2,625.15.
Merck & Co Inc gained 3.5% to $34.97 after the drugmaker raised its quarterly dividend by 11%, its first increase since 2004. The move helped lift the S&P healthcare index 1.4%.
Cisco Systems Inc jumped 5.7% to $18.61 and was the Dow’s biggest gainer after the network equipment maker’s earnings beat estimates and it forecast revenue and profit above expectations.
The CBOE Volatility index fell 9.2%, giving back some of the gains it posted on Wednesday, its biggest day since mid-August. The VIX is up 9% so far this week.
US crude oil gained 2.1%, helping to lift energy shares. The S&P energy group rose 1.8% and led all sectors, while industrials added 1.1% and materials was up 0.9%.
Oil and gas producer Hess Corp added 4% to $63.85, while United Technologies Corp rose 1.3% to $77.47. 3M Co added 1.7% to $80.32.
“These are the names people are gravitating to, because if a recovery comes out of Europe, these industries will be in high demand," said Michael Matousek, senior trader at US Global Investors Inc, which manages about $3 billion in San Antonio.
“However there’s still a lot of volatility, and if we drop back under 1,225 on the S&P we’ll know there’s not a lot of buying power out there."
After the market closed, Walt Disney Co rose 2.9% to $35.65 in extended trading after reporting fourth-quarter revenue that beat expectations.
Nordstrom Inc sank 4.1% to $47.61 after the retailer didn’t raise the upper end of its full-year profit forecast.
The S&P 500 fell 3.7% on Wednesday, its worst daily percentage drop since 18 August. In October, the index recorded its best monthly performance in 20 years on optimism European leaders were taking control of the debt crisis.
Thursday’s economic data showed new US weekly jobless claims declined to the lowest level since April, while the trade deficit unexpectedly shrank in September to its narrowest level since December.
Green Mountain Coffee Roasters Inc pressured the Nasdaq, sliding 39% to $40.89 after its quarterly revenues came in less than expected.
Italy paid its highest yield in 14 years to sell 12-month debt in an auction. Worries remained its borrowing costs were unsustainable.
In Greece, former European Central Bank vice president Lucas Papademos was appointed to head the country’s new crisis coalition.
Volume was about 7.3 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 8.47 billion.
More than two stocks rose for every one that fell on the New York Stock Exchange, while on the Nasdaq, 60% of stocks closed higher.
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