Upbeat Earnings News Leads To Strength On Wall Street
Stocks moved
higher at the start of trading on Wednesday, extending the upward move
seen over the course of the previous session. The major averages all
moved to the upside, with the Dow and the S&P 500 reaching new
five-year highs.
The major averages have not seen much follow-through on their initial upward moves but remain firmly positive. The Dow is up 61.20 points or 0.5 percent at 13,773.41, the Nasdaq is up 13.65 points or 0.4 percent at 3,156.83 and the S&P 500 is up 6.40 points or 0.4 percent at 1,492.38.
The
early strength on Wall Street reflects a positive reaction to the
latest batch of earnings news, with upbeat quarterly results from some
big-name companies inspiring confidence that the markets can sustain
some further upside.
Tech giants IBM Corp. (IBM) and Google (GOOG) are both posting notable gains after reporting fourth quarter earnings that exceeded analyst estimates.
McDonald's
(MCD) is posting a more modest gain after the fast food giant reported
fourth quarter earnings that rose year-over-year and came in above
analyst estimates. The company also reported stronger than expected
revenue growth.
Fellow Dow component United Technologies (UTX)
reported fourth quarter earnings that fell compared to the year-ago
quarter but still came in slightly above expectations. The diversified
conglomerate also reaffirmed its guidance for 2013.
Shares of Apple (AAPL) are up by 1 percent ahead of the release of its fiscal first quarter results after the close of trading.
The gains by IBM and Apple are
contributing to strength in the computer hardware sector, with the NYSE
Arca Computer Hardware Index up by 1.7 percent. With the gain, the
index has risen to a new four-month high.
Software and railroad stocks are also seeing early strength, with CSX Corp. (CSX) leading the railroad sector higher after reporting better than expected fourth quarter results.
On the other hand, early weakness among healthcare provider, gold, and tobacco stocks is helping to limit the upside for the markets.
In
overseas trading, stock markets across the Asia-Pacific region turned
in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index tumbled by 2.1 percent, while China's Shanghai Composite Index edged up by 0.3 percent.
The major European markets have also turned mixed on the day. While the French CAC 40 Index is down by 0.5 percent, the U.K.'s FTSE 100 Index and the German DAX Index are up by 0.2 percent and 0.1 percent, respectively.
In the bond market, treasuries are
seeing modest strength, adding to the slim gains posted in the previous
session. Subsequently, the yield on the benchmark ten-year note, which
moves opposite of its price, is down by less than a basis point at 1.828
percent.
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TSX Slips At Open Wednesday
Toronto stocks moved down at open Wednesday amid marginal selling across a variety of sectors, with the S&P/TSX Composite Index shedding 23.61 points or 0.18 percent to 12,801.02.
The Diversified Materials Index
was down about 1 percent, with First Quantum Minerals losing over 2
percent. Teck Resources and Inmet Mining shed over 1 percent each.
Among gold stocks, Iamgold lost over 7 percent.
In the oil patch, Vermilion Energy and Trilogy Energy were down over 1 percent each. Meanwhile, BlackBerry maker Research In Motion edged up 1 percent ahead of the release of its new devices
On Tuesday, the S&P/TSX
Composite Index extended gains for a fourth session,adding 30.38 points
or 0.24 percent to 12,824.63, levels not seen since July 2011.
The price of crude oil
was trading firm near its 4-month high Wednesday morning ahead of an
important U.S. vote to pass a short-term debt ceiling increase. Crude
for March added $0.01 to $96.69 a barrel.
The price of gold was tittle changed Wednesday morning as the US dollar continued to trade weak versus a basket of currencies. Gold for February delivery edged up $1.00 to $1,694.20 an ounce.
In corporate news from Canada, food retailer Metro Inc. said that it has agreed to sell a portion of its stake in convenience store operator Alimentation Couche-Tard Inc. for gross proceeds of C$479 million.
Chile focused copper miner Celestica Inc.
reported lower fourth-quarter net earnings of $7.2 million or $0.04 per
share compared to $69.2 million or $0.32 per share last year. Adjusted
earnings for the quarter dropped to $50.3 million or $0.25 per share
from $71.1 million or $0.33 per share last year. Analysts expected
earnings of $0.19 per share for the quarter.
Aurizon Mines unanimously recommended that shareholders reject the hostile take-over bid received from Alamos Gold Inc. Alamos proposes to acquire all of the outstanding common shares of Aurizon for C$4.65 per share.
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European Stocks Mostly Higher Ahead Of U.S. Debt Ceiling Vote
European stocks are
trading mostly higher on Wednesday ahead of an important U.S. vote to
pass a short-term debt ceiling increase. House Republicans will consider
a bill to raise the nation's debt ceiling for three months in a move to
push the deadline to mid-April and force the Senate to pass a budget.
The White House said President Barack Obama would sign the bill if it
cleared Congress.
Meanwhile, British Prime Minister David Cameron
said that he is in favor of a referendum on the UK's membership of the
European Union, but insisted that he does not want the country to drift
towards an EU exit. In a much-awaited speech in London, he promised to
hold an in/out referendum on EU membership by the end of 2017, if
re-elected.
The Euro Stoxx 50 index of Eurozone bluechip stocks is edging up marginally, while the Stoxx Europe 50
index, which includes some major U.K. companies, is moving up 0.3
percent. Around Europe, benchmark indexes in the U.K., Germany and
Switzerland are up between 0.2 percent and 0.7 percent.
SAP is
rallying 2.6 percent in Frankfurt after the business software giant
reported an 8 percent decline in fourth-quarter net profit, reflecting
higher share-based compensation expense and acquisition-related charges.
Siemens
is losing a percent as it reported a 12 percent fall in first-quarter
profit to 1.21 billion euros from 1.38 billion euros in the same period
last year. TUI is tumbling 5.4 percent after the travel and
tourism group said it doesn't intend to make an offer for British tour
operator TUI Travel Plc.
BHP Billiton is gaining 0.9 percent in London after the mining giant reported a 3 percent rise in its December quarter iron ore production. Novartis shares
are rallying 3.8 percent in Zurich after the Swiss drug maker reported a
72 percent increase in fourth-quarter profit, benefited by lower
charges as well as exceptional performance from recently launched
products and emerging growth markets.
Unilever shares are
moving up 1.8 percent in Amsterdam after the Anglo-Dutch consumer goods
giant reported a higher profit for its fiscal year 2012, benefited by
strong performance in emerging markets, even though Europe was weak.
In economic releases, French business
confidence deteriorated unexpectedly in January as manufacturers
assessed sharp contraction in past production and forecast a
deterioration on own production outlook, survey data from the
statistical office Insee showed.
Separately, the number of
persons claiming jobless benefits in the U.K. declined unexpectedly in
December, the latest figures from the Office for National Statistics
showed. The number of jobless claims or the claimant count declined by
12,100 from a month earlier to 1.56 million in December, while the
claimant count rate was unchanged at 4.8 percent.
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Asian Stocks Mixed Ahead Of U.S. Debt Ceiling Vote
Asian stocks
ended on a mixed note on Wednesday, as investors adopted a cautious
stance ahead of an important U.S. vote to pass a short-term debt ceiling
increase. House Republicans will consider a bill to raise the nation's
debt ceiling for three months in a move to push the deadline to
mid-April and force the Senate to pass a budget. The White House said
President Barack Obama would sign the bill if it cleared Congress.
A
further rebound in the yen pulled down Japanese shares sharply lower,
while stocks elsewhere posted modest losses or gains. Upbeat earnings
results from tech giants Google and IBM helped to limit the downside to some extent.
Japanese
shares fell sharply dampened by the yen's climb on disappointment with
the Bank of Japan's latest monetary policy announcement. The Nikkei average fell 2.1 percent, while the broader Topix index shed 1.5 percent. Dai-ichi Life Insurance tumbled 4.9 percent on profit taking, falling for the third straight session as investors locked in some recent gains. Brokerage Nomura Holdings retreated 4.5 percent, lender Sumitomo Mitsui Financial Group declined 1.7 percent and realty firm Sumitomo Realty & Development closed down 2.3 percent.
Currency-sensitive Toyota Motor lost 2 percent, Nikon tumbled 3 percent and Kyocera slumped
3.9 percent after the yen saw major gains against both the dollar and
euro in the wake of BOJ decision to defer fresh monetary stimulus until
2014. TDK plummeted 4.2 percent on a Nikkei report that its
operating profit likely dropped 30 percent from a year earlier in the
October-December quarter.
China's Shanghai Composite index
rose 0.3 percent, led by banks after the China Securities reported that
the authorities will select an initial group of between eight and 10
banks to participate in the Qianhai cross-border RMB loan business. Hong
Kong's Hang Seng index edged down 0.1 percent after climbing to a 20-month high in the previous session.
Australian
shares posted modest gains after a surprisingly benign inflation
suggested there is ample room for interest rate cuts at the RBA's next
board meeting on February 5. Consumer prices in Australia were up 2.2
percent in the fourth quarter of 2012 from a year earlier, the
Australian Bureau of Statistics said. That was shy of forecasts for an
increase of 2.4 percent. The benchmark S&P/ASX 200 rose 0.2 percent, while the broader All Ordinaries index advanced 0.3 percent.
Banks rose across the board, with Commonwealth posting a modest 0.3 percent gain, while NAB, Westpac and ANZ rose between 1 percent and 1.5 percent. Global miner BHP Billiton
rallied 1.5 percent after the company forecast a compound annual growth
rate of 10 percent over the two years to the end of fiscal 2014 and
reiterated its guidance for the three key divisions of iron ore, copper
and petroleum. Rival Rio Tinto shed 0.7 percent and Fortescue shares edged down marginally.
Seoul shares edged lower as investor adopted a cautious stance ahead of fourth-quarter earnings from major companies. The benchmark Kospi average shed 0.8 percent. The local currency
fell sharply against the U.S. dollar after Finance Minister Bahk Jae
Wan said the government is "all ready" for new measures to curb the
currency's volatility. Hyundai Motor, the nation's largest automaker, rose 1.6 percent, while shares of its affiliate Hyundai Mobis gained half a percent.
New Zealand shares eked out modest gains despite mixed regional cues. The benchmark NZX-50 index rose 0.64 points or 0.02 percent to 4,188. Australian wealth manager AMP rose 2.5 percent, while lender Heartland New Zealand, online auction site Trade Me and pay TV operator Sky Network Television gained about 1.5 percent each.
Fletcher Building,
the nation's largest construction company, rose half a percent after
Australian building products maker Boral upgraded its underlying
first-half profit forecast. Rural services firm PGG Wrightson led the decliners on the exchange, falling 6.5 percent on a brokerage downgrade. Heavyweight Telecom lost 2.1 percent.
Elsewhere, India's benchmark Sensex was down 0.1 percent and the Taiwan Weighted average slipped 0.2 percent, while Indonesia's Jakarta Composite index edged up marginally and Malaysia's KLSE Composite index rose 0.4 percent.
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Crude Steady Near $97
The price of crude oil was
trading firm near its 4-month high Wednesday morning ahead of an
important U.S. vote to pass a short-term debt ceiling increase.
Light Sweet Crude Oil (WTI)
futures for March delivery, edged up $0.14 to $96.82 a barrel.
Yesterday, oil moved up to settle at a fresh four-month high as the
dollar weakened even as investors tracked some soft economic data from
the U.S. with existing home sales declining in December. Oil prices were
also helped by easing demand concerns after Japan announced fresh
monetary stimulus to prop up its sagging economy.
The price of gold was tittle changed Wednesday morning as the US dollar continued to trade weak versus a basket of currencies.
Meanwhile, Goldman Sachs in
a recent report set 3-month gold price target at $1,825 an ounce and
said adverse impact of increasing taxes and prediction for an anemic US
GDP growth are 2 factors which are bound to boost gold.
Gold for
February delivery, the most actively traded contract, edged down $1.00
to $1,692 20 an ounce. Yesterday, gold settled higher with investors
seeking the safe haven status of the precious metal on a weak dollar and
some soft economic data out of the U.S. showing a drop in existing home
sales. Investors also weighed the Bank of Japan's move to ease its
monetary policy.
Holdings of SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, were unchanged at 1,332.61 tons.
This morning, the U.S. dollar
was lingering round its 11-month low versus the euro, while trading
flat against sterling. The buck was hovering around its 30-month high
versus the yen and ticking lower against the Swiss franc.
Today after the market hours, the API will release its US crude oil inventories report for the week ended January 18.
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