While you were sleeping: Stocks, oil rise

While you were sleeping: Stocks, oil rise

Oct. 20 (BusinessDesk) - Wall Street gained with the price of oil and as US companies including Yahoo! reported better-than-expected quarterly earnings.

About 80 percent of the 70 S&P 500 companies that have reported so far have exceeded earnings' estimates, according to Reuters.

"We would see the third quarter as the bottoming out of the earnings recession that we have been experiencing for the last year or so," Tracy Maeter, global investment specialist, JP Morgan Private Bank in Philadelphia, told Reuters.

In 2.12pm trading in New York, the Dow Jones Industrial Average rose 0.4 percent, while the Nasdaq Composite Index added 0.2 percent. In 1.57pm trading, the Standard & Poor’s 500 Index gained 0.4 percent.

Shares of Yahoo! traded 2.6 percent higher as of 2.34pm in New York after it reported better-than-expected third-quarter profit.

The Dow rose, led by gains in shares of American Express and those of Goldman Sachs, recently trading 2.3 percent and 1.5 percent higher respectively.

There were earnings disappointments too. Shares of Intel sank, recently down 6.2 percent, after the company offered a fourth-quarter sales outlook that failed to meet expectations.

The Federal Open Market Committee begins its next two-day policy meeting on November 1, though most traders bet that it won’t raise interest rates until its December gathering.

The latest data didn’t alter those expectations.

"National economic activity continued to expand during the reporting period from late August to early October," the Fed said in its Beige Book based on a survey from 12 central bank districts. “Outlooks were mostly positive, with growth expected to continue at a slight to moderate pace in several districts.”

"Labour market conditions remained tight, with modest employment and wage growth noted over the reporting period," the Fed said. “Wage growth held fairly steady at modest levels, although some Districts reported rising pressure for certain sectors.”

Meanwhile, the Atlanta Fed said its GDPNow model predicts the US economy grew at 2 percent in the third quarter, up from a 1.9 percent estimate on October 14.

In Europe, the Stoxx 600 Index ended the session with a gain of 0.3 percent. Germany’s DAX Index rose 0.1 percent, while the UK’s FTSE 100 Index and France’s CAC 40 Index each advanced 0.3 percent.

The European Central Bank began its two-day gathering and investors will scrutinise its concluding statement for clues about its plans for its asset purchase program.

Oil climbed to the highest level in 15 months after an Energy Information Administration report showed an unexpected drawdown of US crude inventories.

“It’s a big draw. It’s a bit of surprise for the market because we are also in peak turnarounds and that’s what makes it so impressive,” Amrita Sen, chief oil economist for Energy Aspects in London, told Bloomberg.

Imports to the US have dropped significantly, she said. “If then, on top of this, the OPEC cuts do materialise, our view is that we can see US$60 by year-end. A lot depends on what happens between now and November 30.”

(BusinessDesk)

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