The S&P 500 and the Dow closed with slight losses today after briefly touching intraday records, but strength in semiconductors boosted the Nasdaq.
Subdued trading followed the Dow’s biggest weekly gain since January 2013 and the S&P’s biggest two-week jump since December 2011. Gains in recent weeks have largely come on the back of strong quarterly results, which have eased concerns over how corporations are faring in an uncertain global economy.
The Dow Jones industrial average fell 24.28 points, or 0.14 percent, to 17,366.24, the S&P 500 lost 0.24 points, or 0.01 percent, to 2,017.81 and the Nasdaq Composite added 8.17 points, or 0.18 percent, to 4,638.91.
Shares of AIG rose 1.4 percent in after-hours trading. The company reported better-than-expected third-quarter earnings.
Sprint shares fell 5.25 percent after hours. Its third-quarter revenue rose slightly less than expected.
In the latest economic data, US construction spending fell 0.4 percent in September, well below expectations. However, manufacturing activity unexpectedly accelerated in October and automobile sales were strong, easing concerns of a significant moderation in economic growth.
EUROPEAN MARKETS
European shares in turn slipped from a four-week high today, with disappointing data from Europe and the United States hurting sentiment and gas transport group Snam leading the utilities sector down following a regulatory setback.
The European utilities index fell 2.3 percent, the top sectoral decliner, hit by an 11.3 percent drop in Snam after a regulator ruling that cut the remuneration rate for the gas storage business in 2015. Enel and Terna fell 4.2 percent and 6.7 percent respectively.
The FTSEurofirst 300 index of top European shares ended 0.86 percent lower at 1,340.38 points after rising to as much as 1,355.16, the highest since early October. The index climbed 1.8 percent on Friday after the Bank of Japan surprised global markets by ramping up its stimulus spending.
European shares extended losses in late trading despite the ISM’s data showing US manufacturing expanded far more briskly than estimated, with investors instead focusing on Markit figures showing the manufacturing sector slowed in October and the Commerce Department’s construction spending numbers that fell for a second straight month in September.
US economic numbers added to investors’ jitters after a business survey showed manufacturing activity in the euro zone grew slightly more slowly than thought last month.
Figures also showed that Germany, the region’s growth engine, recorded only tepid expansion and France and Italy contracted.
Lorne Baring, managing director of B Capital Wealth Management, said the euro zone data confirmed the ongoing stagnation worry for Europe and highlighted the necessity for the ECB actively to help the region’s economy.
Italy’s MIB index underperformed, down 2.1 percent, on weaker utilities and as national statistics office ISTAT forecast the country’s economy will contract by 0.3 percent this year, in line with the government’s most recent forecast, and grow by a weak 0.5 percent in 2015.
Disappointing surveys on China’s manufacturing and services sectors also weighed on sentiment. Analysts advised caution about the market’s near-term outlook.
Some sectors, however, managed to stay positive. Airline stocks were boosted by an 7.7 percent jump in Ryanair after it lifted its annual profit forecast almost 20 percent on a surge in winter bookings, and said it would slash fares by up to 10 percent in the new year
The upbeat outlook helped its rivals, with easyJet up 2.7 percent and Air France-KLM gaining 3.5 percent.
Among other sharp movers, Puma jumped 8.2 percent, with traders citing talk of a bid for French group Kering’s 86 percent stake in the German sportswear company. Kering and Puma both declined to comment.
Half way into the earnings season, 67 percent of companies met or beat profit forecasts and 58 percent met or beat revenue predictions, StarMine data showed. In absolute terms, profits are up 8.9 percent, while revenues are down 0.5 percent, highlighting the fact that Europe’s earnings rebound has mostly been coming from cost-cutting and lower financing costs.
ASIAN MARKETS
Meanwhile, Japanese stocks soared to levels before the global financial crisis on Friday, after the Bank of Japan stunned markets by easing policy further in a move prompted by slow inflation after an April tax hike dented economic growth.
The central bank decided to increase the pace at which it expands base money to about 80 trillion yen per year, up from a previous target of 60-70 trillion yen.
The BOJ also decided to increase its purchases of government debt by about 30 trillion yen and extend the average duration of JGB holdings to around 10 years, and decided to triple its purchases of exchange-traded funds and Japan real estate investment trusts.
The Nikkei benchmark ended 4.8 percent higher at 16,413.76, the highest closing price since November 2007. It was also the biggest daily percentage gain since June 2013. The BOJ’s shock decision also helped the index build a 7.3 percent rise for the week, the best weekly percentage gain in more than a year. For the month, it added 1.5 percent.
The Japanese economy has been plagued by weak consumption after the government raised the consumption tax in April, prompting government ministers to call on Prime Minister Shinzo Abe to delay a planned second consumption tax increase next year. But the senior trader said that Abe may use the strong stock market performance as ammunition to stick to the initial plan.
Analysts also noted the BOJ is moving quickly to spark a turnaround in the economy, which suffered its biggest slump since the global financial crisis in the second quarter.
At a post-meeting news conference, BOJ Governor Haruhiko Kuroda told reporters that it is important for the central bank to strongly commit to achieving its 2 percent price target.
The dollar surged more than 1 percent to a high of 110.67 yen JPY=, its best level since January 2008, lifting exporters. Toyota Motor Corp jumped 3.8 percent, Honda Motor Co surged 4.7 percent and Tokyo Electron Ltd soared 3.8 percent.
Financial shares also surged, with Mitsubishi UFJ Financial Group rising 4.0 percent, Sumitomo Mitsui Financial Group soaring 7.2 percent, and Nomura Holdings surging 6.8 percent.
The market also got a boost from news that the government will approve on Friday targets for the $1.2 trillion Government Pension Investment Fund which aim to increase the ratio of Japanese shares in its holdings to 25 percent form the current 12 percent, sources said. The target for foreign stocks is also expected to rise from its current 12 percent target, the sources said.
The broader Topix gained 4.3 percent to 1,333.64, while the JPX-Nikkei Index 400 surged 4.5 percent to 12,172.62.
Source: Buenos Aires Herald
Felipe