US stocks surged today, with major indexes up more than 1 percent in a broad rally as strong results, including from two Dow components, reassured investors that corporations continue to fare well despite concerns about global economic growth.
The advance continued a recent bout of strength for equities. The S&P 500 has posted a gain of 0.9 percent or more in four of the past five sessions, taking it within 2.8 percent of its record close. After a four-week string of declines, the S&P is up 3.6 percent this week, putting it on track for its biggest weekly advance since January 2013.
The CBOE Volatility index was down 10.5 percent at 15.98. The «fear index» is off 27 percent this week, on track for its biggest weekly decline since January 2013.
Shares of both Caterpillar Inc and 3M Co rose following their results. Caterpillar, which also raised its full-year profit view, was up 5.2 percent at $99.52 while 3M added 6 percent to $147.34. The S&P industrial sector rose 2.2 percent as one of the biggest advancing sectors on the day.
On the downside, AT&T Inc fell 2.6 percent to $33.60 a day after reporting weaker-than-expected revenue growth. The results pressured the telecom sector .SPLRCL, which lost 1.4 percent as the only one of the ten primary S&P 500 sectors down on the day.
Yelp Inc slumped 16 percent to $58.90 on heavy volume a day after giving a revenue outlook that was below expectations. The outlook prompted many analysts to cut their price targets on the stock.
This season has largely been a positive one for companies. With 35 percent of the S&P 500 having reported, 69.5 percent have exceeded profit expectations, according to Thomson Reuters data, above the long-term average of 63 percent.
Jobless claims rose by 17,000 in the latest week, in line with expectations, while the underlying trend remained consistent with a firming labor market.
At 10:56 a.m. the Dow Jones industrial average rose 255.15 points, or 1.55 percent, to 16,716.47, the S&P 500 gained 27.56 points, or 1.43 percent, to 1,954.67 and the Nasdaq Composite added 73.45 points, or 1.68 percent, to 4,456.30.
Advancing issues outnumbered declining ones on the NYSE by 2,494 to 440, for a 5.67-to-1 ratio on the upside; on the Nasdaq, 2,054 issues rose and 473 fell for a 4.34-to-1 ratio.
The benchmark S&P 500 index was posting 32 new 52-week highs and 2 new lows; the Nasdaq Composite was recording 39 new highs and 23 new lows.
EUROPEAN MARKETS
European stocks edged higher in choppy trade today, buoyed by strength on Wall Street but hindered by weak corporate results from companies including French tyre-maker Michelin.
The pan-European FTSEurofirst 300 also benefited from better-than-expected euro zone business activity data, although it still spent most of the day in negative territory until US stock futures turned higher.
The US S&P 500 gained around 1 percent after strong earnings from the likes of Caterpillar, which reported stronger-than-expected quarterly profit and boosted its 2014 profit outlook.
The rise helped European stocks to erase losses, with the FTSEurofirst 300 trading 0.1 percent higher at 1,310.34.
However, European indexes badly underperformed US counterparts, hindered by a number of poor earnings reports.
Michelin and Unilever cited poor demand from emerging markets as the former cut its full-year revenue goal and the latter reported weaker-than-expected quarterly sales. Michelin dropped 5.6 percent, while Unilever’s London-listed shares were down 2.4 percent.
Britain’s biggest grocer Tesco dropped 7.7 percent, while French advertising group Publicis also fell sharply after reporting disappointing numbers.
Of the STOXX Europe 600 companies to report results so far this quarter, 36 percent of companies have missed expectations, compared to 29 percent on Wall Street’s S&P 500 .
Amid growing concerns over the strength in economic growth worldwide, Paris-based Carmignac, which has 49 billion euros ($62.1 billion) in assets under management, recently slashed its exposure to equities worldwide to 12 percent from 42 percent at the end of last month.
The end of easy monetary policy from the US Federal Reserve will put equities under pressure, Frederic Leroux, global fund manager at Carmignac, said.
Among a handful of outperformers, Danish industrial enzymes maker Novozymes reported third-quarter earnings above expectations and raised its full-year outlook for operating profit growth. Its shares rose 7.4 percent.
ASIAN MARKETS
Japanese stocks fell today as a slight expansion in China’s manufacturing sector did little to quell market concerns about fragile global growth prospects.
The Nikkei share index closed down 0.4 percent at 15,138.96.
Airbag maker Takata Corp’s shares tumbled 6.2 percent to an 18-month low after US regulators expanded the number of vehicles using the firm’s faulty airbags that may be affected by recalls.
The broader Topix lost 0.3 percent to close at 1,232.34, while the new JPX-Nikkei Index 400 shed 0.3 percent to end at 11,212.87.
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