The stock markets in the United States ended the trading session higher driven by positive corporate earnings and data showed stronger economic growth in Europe.
The European markets also rallied while the Asia-Pacific Markets declined today. The S&P 500 recovered around 50% of its losses when the selloff began in mid-September. Since October 15, the index gained 4.9% as it rebounded five times over the past six trading days.
Today, economic data showed that the economy in the European region managed to move away from another recession. The Purchasing Managers’ Index indicating that the manufacturing sector in the region expanded.
There are signs of further economic recovery in Spain as its third quarter unemployment dropped to the lowest rate since 2011. Factories in Germany rebounded.
Meanwhile, the number of people who filed for unemployment benefits in the United States last month was less than any time in 14 years. The Department of Labor reported that four-week average of jobless claims declined to 281,000, the lowest since May 2000.
In a telephone interview with Bloomberg, Alan Gayle, director of asset allocation at RidgeWorth Investments commented, “We’re seeing some peace here in earnings and better macro data, which are helping to fuel investor confidence.” He added, “That trend in jobless claims suggests we are going to see another good job increase for October.”
On the other hand, Leo Grobowski, chief investment officer at BNY Mellon Wealth Management opined, “ The fundamental focus is on earnings. “The bigger picture fear of global growth slowdown is going to remain with us. That’s going to prevent any meaningful market appreciation. Investors should be prepared for a choppy ride.”
- Dow Jones Industrial Average (DJIA) – 16,677.90 (+1.32%)
- S&P 500- 1,950.82 (+1.32%)
- NASDAQ- 4,452.79 (+1.60%)
- Russell 2000- 1,117.08 (+1.84%)
- EURO STOXX 50 Price EUR- 3,044.30 (+1.19%)
- FTSE 100 Index- 6,419.15 (+0.30%)
- Deutsche Borse AG German Stock Index DAX- 9,047.31 (+1.20%)
- Nikkei 225- 15,138.96 (-0.37%)
- Hong Kong Hang Seng Index- 23,333.18 (-0.30%)
- Shanghai Shenzhen CSI 300 Index- 2,395.94 (-0.94%)
Stocks in Focus
The stock price of Caterpillar Inc. (NASDAQ:CAT) increased almost 5% to $99.27 per share after the company reported earnings the beat the consensus estimate of Wall Street analysts. The largest construction equipment manufacturer posted earnings of $1.72 per share on $13.55 billion in revenue compared with $1.36 per share on $13.19 billion in revenue expected by analysts.
TD Ameritrade chief strategist Joe Kinahan commented, “The Caterpillar earnings were really good. It’s hard not to be optimistic on this market if we close above 1,950. If we get above 1,950, we’re in general striking distance of all-time highs again.”
The shares of Yelp Inc (NYSE:YELP) plummeted more than 18% to $57.17 after the company said its fourth-quarter revenue would be lower than consensus estimate. Yelp expected to deliver revenue in the range of $107 million to $108 million. Analysts have a consensus estimate of $111 million in revenue.
3M Co (NYSE:MMM) surged more than 4% to $145.05 per share after CEO Inge Thulin said the company’s international growth currently accounts two-thirds of sales. The company is now expecting to achieve earnings in the range of $7.40 to $7.50 per share for the fiscal 2014.