The stock markets in the United States gained as weaker-than-expected manufacturing data boosted investors’ view that the Federal Reserve may delay the implementation of interest rate hikes. Positive corporate earnings are also driving bullish conviction about the market.
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“Fed action is probably put off further and earnings are coming in better than expected. We went into the earnings season by lowering expectations, so we’re set up for a little bit of a rebound here coming into the actual announcement,” said Bill Schultz, chief investment officer at McQueen, Ball & Associates
The Empire State manufacturing index declined to a negative reading while industrial production dropped by more than expected in March, an indication that the U.S. economic growth is decelerating.
On the other hand, the National Association of Homebuilders/Wells Fargo housing index increased in April.
Centre Funds Chief Investment Officer, James Abate noted that corporate earnings beat or meet lowered expectations. He said, “Companies have become very adept at boosting their earnings per share by cutting cost, managing taxes and share buybacks.”
He added that the primary reason behind the rally of equity markets amid the slowing economic growth was the “monetary policy of abundant liquidity from the ECB, Bank of Japan and even the Federal Reserve.”
Meanwhile, Ernie Cecilia, chief investment officer at Bryn Mawr Trust Co commented, “In many ways companies have surprised a bit to the upside. The market is slowly getting comfortable with foreign exchange headwinds and taking a look at how the intrinsic business is doing.”
The European Central Bank (ECB) maintained its interest rates at record lows while focusing on its bond-buying program. ECB President Mario Draghi said the bond purchases will continue until they see a “sustained adjustment” for inflation.
- Dow Jones Industrial Average (DJIA) – 18,111.74 (+0.42%)
- S&P 500- 2,106.74 (+0.51%)
- NASDAQ- 5,011.02 (+0.68%)
- Russell 2000- 1,276.64 (+0.89%)
- EURO STOXX 50 Price EUR- 3,803.55 (+0.50%)
- FTSE 100 Index- 7,096.78 (+0.30%)
- Deutsche Borse AG German Stock Index DAX- 12,231.34 (+0.03%)
- Nikkei 225- 19,869.76 (-0.20%)
- Hong Kong Hang Seng Index- 27,618.82 (+0.21%)
- Shanghai Shenzhen CSI 300 Index- 4,380.51 (-1.30%)
Stocks in Focus
The stock price of Delta Air Lines increased 2.60% to $4.20 after reporting earnings that beat expectations. The company posted adjusted earnings of $0.45 per share in the first quarter compared with the $0.44 per share estimated by analysts. Its revenue rose 5% to $9.39 billion.
The shares of HCA Holdings gained 2.46% to $79.24 after raising its business guidance for 2015. The company said hospital visits and insurance reimbursements boosted its preliminary results for the first quarter. HCA Holdings estimated that it will be able to achieve revenues of around $39 billion to $40 billion and adjusted EP of around $4.90 to $5.30 for the fiscal 2015.
Intel climbed 4.26% to $32.83 per share driven by its outlook for the second quarter. The tech giant estimated that it will be able to deliver $13.2 billion in revenues for the quarter, and hinted a strong demand for data center chips.