October 31, 2014
Wall Street extends rally, lifted by Apple and Home Depot
With the day's gains, the S&P 500 ended within 10 points of its all-time intraday high of 1,991.39 reached on July 24. The Nasdaq Composite extended Monday's gains and ended on Tuesday at yet another 14-year high.
Apple Inc was among the most heavily traded names of the day after the stock hit $100 for the first time since its seven-for-one split in June. The stock climbed 1.4 percent to a new split-adjusted closing high of $100.53. Apple contributed the most to the gains of both the S&P 500 and the Nasdaq Composite in Tuesday's session.
Consumer discretionary shares led advances in the S&P 500 as a string of positive earnings reports lifted the stocks of major retailers. Home Depot Inc rose 5.6 percent, its largest daily percentage gain since May 2009, to close at a record $88.23 The stock also set an intraday lifetime high of $88.98. The rally occurred after the world's largest home improvement retailer beat Wall Street's earnings expectations.
Shares of Lowe's Cos, a Home Depot rival, rose 2.1 percent to $51.52.
The Dow Jones industrial average rose 80.85 points, or 0.48 percent, to close at 16,919.59. The S&P 500 gained 9.86 points, or 0.50 percent, to end at 1,981.60. The Nasdaq Composite added 19.20 points, or 0.43 percent, to finish at 4,527.51, its highest close since March 31, 2000.
Encouraging data on the economic front gave the market another boost, driving the PHLX housing sector index up 1.7 percent. Housing starts posted their strongest rebound in eight months in July, topping expectations and adding another data point to suggest optimism is returning among homebuilders.
About 4.5 billion shares traded on all US platforms, according to BATS exchange data, compared with the five-day average of 5.2 billion.
In Europe, shares rose to extend the previous session's rally, with Germany's DAX index outperforming, driven by what traders saw as an easing of tension in the Ukraine crisis.
European stock markets had rebounded sharply after Russia's Foreign Ministry said some progress had been achieved during talks between Russia, Germany, France and Ukraine over the conflict.
Although the situation remained fragile - with Ukraine government forces reporting new advances against pro-Russian separatists - traders took consolation from the fact that the situation had not worsened materially, in their eyes.
The pan-European FTSEurofirst 300 index, which is still down by nearly 4 percent since mid-June, rose 0.4 percent to 1,344.43 points.
The DAX outperformed to rise 1 percent to 9,333.54 points. The DAX has risen nearly 4 percent in the past 10 days but is still down by some 7 percent from its record high of 10,050.98 points set in late June.
Torrison said the DAX could rise to 9,500 points by the end of August, if the Ukraine situation did not worsen.
The German equity market's recent underperformance has dragged the average price-to-earnings ratio of local shares down to a level not seen since October 2013, according to data from Thomson Reuters Datastream.
The MSCI Germany index trades at 12 times expected earnings while the MSCI Europe trades at 13.6 times earnings, making Germany's P/E ratio relative to Europe the cheapest in nearly 10 years. By comparison, Wall Street's S&P 500 trades at about 15 times expected earnings.
Shares in Moller-Maersk surged 4.6 percent after the Danish shipping and oil group posted better-than-expected results, raised its full-year profit outlook and disclosed ed a $1 billion share buyback plan.
Shares in Lindt & Spruengli also rose 1.2 percent as the Swiss chocolate maker confirmed its full-year targets after profit rose 14 percent in the first half.
As Europe's earnings season draws to an end, about 52 percent of companies listed on the pan-European STOXX 600 index companies have met or beaten earnings forecasts, according to Thomson Reuters StarMine data.
Meanwhile, Japan's Nikkei share average hit a two-week high as robust US housing data boosted sentiment, while the weaker yen increased risk appetite in index-heavy stocks and exporters such as SoftBank Corp and Panasonic Corp.
Receding tensions in Ukraine also brightened the mood, after Russia said all objections to it sending a humanitarian convoy to Ukraine had been resolved.
The Nikkei rose for a seventh straight day, rising 0.8 percent to 15,449.79 points. It hit an intraday high of 15,476.05, its best level since August 5.
The broader Topix gained 0.7 percent to 1,280.29, and the JPX-Nikkei Index 400 advanced 0.8 percent to 11,652.03.