The stock markets in the United States ended the week with gains driven by positive corporate earnings performance, particularly from Amazon.com Inc (NASDAQ:AMZN), and Microsoft Corporation (NASDAQ:MSFT).
In a phone interview with Bloomberg, Charlie Smith, chief investment officer of Fort Pitt Capital Group Inc said, “Earnings have been good enough and the liquidity spigot is open so that people see very little risk in the system. It’s like a giant game of musical chairs. The attitude on the part of most investors is that they have to play while the Fed got the music going.”
The momentum was also driven by the growing speculation that the Federal Reserve will not taper its quantitative easing after data on consumer confidence declined to a 10-month low in October. Data released by Thomson Reuters/University of Michigan showed that the final consumer sentiment index declined from 77.5 last month to 73.2.
Based on data compiled by Bloomberg, out of the 244 companies in the S&P 500 that already reported their financial results, 76 percent posted earnings that beat consensus estimates, while 56 percent outperformed the sales forecasts of analysts.
According to Alan Gayle, senior investment strategist and director of asset allocation at Ridgeworth Capital Management, the markets are refocusing on corporate earnings, which are turning better-than-expected to some extent. He added, “Valuation is still reasonable and the economy appears to getting better. The market does look a bit extended so it wouldn’t surprise me if we saw some near-term pullback.”
U.S. Markets
- Dow Jones Industrial Average (DJIA)- 15, 570.28 (+0.39%)
- S&P 500- 1,759.77 (+0.44%)
- NASDAQ- 3,943.36 (+0.37%)
- Russell 2000- 1,116.61 (-0.20%)
European Markets
- EURO STOXX 50 Price EUR- 3,034.50 (-0.15%)
- FTSE 100 Index- 6,721.34 (+0.12%)
- Deutsche Borse AG German Stock Index DAX- 8,985.74 (+0.06%)
Asia Pacific Markets
- Nikkei 225- 14,088.19 (-2.75%)
- Hong Kong Hang Seng Index- 22,698.34 (-0.60%)
- Shanghai Shenzhen CSI 300 Index- 2, 368.56 (-1.33%)
Stocks in Focus
The stock price of Amazon.com Inc (NASDAQ:AMZN) rose 9.12 percent to $363.67 per share despite reporting earnings loss of $0.12 per share. Investors were happy with sales performance of the company, which increased 24 percent year-over-year to $17 billion. In addition, the e-commerce giant revealed that it added 9 million customers during the third quarter, bringing its total active customers to 224 million. Amazon CEO Jeff Bezons put more investments in the company’s delivery network, cloud computing services, and Kindle e-readers and tablets to boost its growth in the future.
Microsoft Corporation (NASDAQ:MSFT) gained 6 percent to $35.73 per share as the company continue to transform its business and delivered financial results that beat the consensus estimates of Wall Street analysts. The company reported $0.62 earnings per share, an increase of 17 percent and $18.53 billion revenue, up by 16 percent from the same period a year ago. Microsoft revealed that its enterprise business is outperforming its peers in the sector.
The chief executive officer of Zynga Inc (NASDAQ:ZNGA) Don Mattrick showed that its efforts in turning around the company is effective as the company reported improvements in financial performance. Zynga posted lower-than-expected losses for the third quarter, even if its revenue and the number of its users declined. The stock price of the company climbed 5.49 percent to $3.72 a share.
The stock value of Yahoo! Inc. (NASDAQ:YHOO) fell 2.51 percent to $32.22 per share after Yahoo Japan Corp (OTCMKTS:YAHOF) (TYO:4689) issued a full-year earnings and revenue guidance lower than the expectations of analysts.
