The stock markets in the United States gained today driven by the strength of equities in the technology sector. The rally minimized concerns regarding weaker corporate earnings and the outlook for the global economic growth.
The International Monetary Fund (IMF) revised its global growth outlook downward to 3.5% for 2015 despite the fact that the United States economy is growing faster and price of oil is cheaper. The IMF’s previously estimated that economy will grow 3.8% this year.
The IMF indicated that the global growth is “still subdued, weighed down by underlying weakness elsewhere.” The benefit from declining oil prices is more than offset by adverse factors such as the lingering legacies of the crisis and lower potential growth in many countries.
The international organization’s economic counsellor and director of research, Olivier Blanchard said the cross currents at the country level make a complicated picture.
“It means good news for oil importers, bad news for oil exporters. Good news for commodity importers, bad news for exporters. Continuing struggles for the countries which show scars of the crisis, and not so for others. Good news for countries more linked to the euro and the yen, bad news for those more linked to the dollar,” explained Blanchard.
The European Central Bank (ECB) is scheduled to announce its monetary policy this week. There is an increasing speculation among investors that the ECB will expand its asset purchases. Economists polled by Bloomberg forecasted that the central bank will announced a €550 billion quantitative easing program.
In a telephone interview with Bloomberg, RW Baird & Co.’s chief investment strategist, Bruce Bittles commented that the market is a little oversold. According to him, I”f the ECB comes through with a strong quantitative easing strategy, that may be able to pull Europe away from the edge in terms of recession and deflation, which would ease concerns that the U.S. would succumb to slower growth as well.”
In the United States, investors will evaluate economic reports on housing and manufacturing later this week to determine the strength of the country’s economy.
- Dow Jones Industrial Average (DJIA) – 17,515.23 (+0.02%)
- S&P 500- 2,022.55 (+0.15%)
- NASDAQ- 4,654.85 (+0.44%)
- Russell 2000- 1,168.54 (-0.69%)
- EURO STOXX 50 Price EUR- 3,244.92 (+0.75%)
- FTSE 100 Index- 6,620.10 (+0.52%)
- Deutsche Borse AG German Stock Index DAX- 10,257.13 (+0.14%)
- Nikkei 225- 17,366.30 (+2.07%)
- Hong Kong Hang Seng Index- 29,951.16 (+0.90%)
- Shanghai Shenzhen CSI 300 Index- 3,396.22 (+1.22%)
Stocks in Focus
The stock price of Apple gained 2.58% to $108.72 per share. The iPhone and iPad maker recently opened its second retail store in China. Apple is planning to open five stores in the country before the Chinese New Year, according to its retail chief Angela Ahrendts.
Micron Technology climbed 2.35% to $29.67 per share after Susquehanna analysts Mehdi Hosseini upgraded his rating for the stock to Buy with a $38 price target. The analyst previously had a Neutral rating and $31 price target for the stock.
Smith and Wesson Holding Corp surged 16.47% to $11.67 per share after the company raised its guidance for the third quarter and full year 2015. The firearm manufacturer is now expecting its net sales to be around $124 million to $126 million and GAAP earnings between $0.10 and $0.11 per diluted share for the third quarter. For the fiscal 2015, the company expected to achieve net sales of around $526 million to $30 million and GAAP earnings between $0.68 and $0.72 per diluted share.