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US stocks end higher despite drag from IBM

US stocks ended higher today on investor hopes for a strong earnings season, but IBM's disappointing results limited gains.

Earnings reports from Halliburton, Gannett Co , and others, helped ease the worries over global growth and falling commodity prices that last week helped drive stocks close to correction territory.

IBM shares slumped 7.1 percent to $169.10, the biggest drag on both the Dow and S&P 500, after third-quarter earnings fell well short of Wall Street expectations. IBM abandoned its 2015 operating earnings target and said it would pay Globalfoundries $1.5 billion over three years to take its loss-making semiconductor unit.

The Dow Jones industrial average rose 19.26 points, or 0.12 percent, to 16,399.67, the S&P 500 gained 17.25 points, or 0.91 percent, to 1,904.01 and the Nasdaq Composite added 57.64 points, or 1.35 percent, to 4,316.07.

Small caps also rebounded, with the Russell 2000 up 1.2 percent.

The CBOE Volatility index fell 15.5 percent and closed below its 14-day moving average. The VIX had jumped 51 percent in two weeks.

Earnings season will ramp up significantly this week, with nearly 130 S&P 500 companies scheduled to report. Third-quarter earnings are expected to increase 6.7 percent from a year earlier on revenue growth of 3.6 percent.

EUROPEAN MARKETS

European stocks fell, trimming gains made in the previous session, as a profit warning by SAP hit technology shares.

Shares in the German business software maker plunged 5.8 percent after it cut its outlook for full-year operating profit, joining a succession of profit and sales warnings from tech groups in the past few weeks.

The STOXX 600 Technology index fell 2.4 percent.

SAP was the worst performer on the German DAX, which fell 1.5 percent, lagging other major European stock indexes. It has dropped around 8 percent so far in October, after data called into question Germany's economic resilience.

Both the technology sector and German blue-chip index are sensitive to economic growth, or highly "cyclical".

Outside the FTSEurofirst 300 of top European shares, Portugal Telecom fell 10 percent, touching a record low. The bankruptcy of Espirito Santo holding company Rioforte raised the risk it will not recover 900 million euros ($1.2 billion) in debt from the company.

The FTSEurofirst 300 closed down 0.6 percent at 1,272.72 points, trimming a 2.8 percent rise on Friday that was prompted by reassuring US macroeconomic data.

ASIAN MARKETS

Meanwhile, Japan's Nikkei share average surged 4.0 percent to post its biggest daily rise since June 2013 as investors took heart from upbeat US data and the weaker yen lifted exporters such as Toyota Motor Corp and Honda Motor Co.

Also underpinning the market was news that Japan's $1.2 trillion public pension fund will likely raise its allocation to domestic stocks to about 25 percent from 12 percent at present.

The Nikkei share average added 578.72 points to end at 15,111.23, recouping most of the losses posted last week. Upbeat US consumer confidence supported investor sentiment and lifted risk appetites.

Toyota jumped 5.2 percent, Honda soared 3.5 percent and Panasonic Corp surged 4.5 percent after the dollar rose 0.4 percent at 107.345 yen, moving further from a five-week low of 105.90 hit the previous week.

NEC Corp rose 6.5 percent after the Nikkei business daily reported its operating profit for the April-September period was likely to be about 20 billion yen, compared to just shy of 400 million yen in the previous year.

While shares in the Japanese market soared mostly on external factors today, a domestic political scandal could have a negative impact in the mid-to-long term, analysts said.

Japanese Prime Minister Shinzo Abe said today that he had accepted the resignations of Trade Minister Yuko Obuchi and Justice Minister Midori Matsushima over questionable political spending and alleged violation of election law, respectively.

The broader Topix jumped 4.0 percent to 1,224.34, and the new JPX-Nikkei Index 400 gained 4.0 percent to 11,142.42.

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Tags:  Stocks  shares  FTSEurofirst  Nikkei  US  Dow Jones  





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