While you were sleeping: US manufacturing lifts mood
By Margreet Dietz
Oct. 3 (BusinessDesk) - US stocks and the dollar gained, with the Dow and S 500 climbing to records, as reports of better-than-expected manufacturing activity bolstered optimism about the outlook
for the economy and corporate profits.
“You’ve seen a pretty healthy first half of the year with earnings, when we (are) headed into Q3, there is a sense of
optimism that you can see upfront,” Nadia Lovell, US Equity Strategist, JP Morgan Private Bank, told Reuters.
Third-quarter earnings are expected to increase 6.2 percent from a year earlier, according to Reuters.
In 1.37pm trading in New York, the Dow rose 0.54 percent, while the Nasdaq Composite Index gained 0.15 percent. In
1.22pm trading, the Standard & Poor’s 500 Index advanced 0.28 percent.
The Dow touched a record high 22,538.20, while the S 500 climbed to a record 2,527.96.
An Institute for Supply Management report showed its index of US national factory activity climbed to 60.8 in September,
the highest reading in 13 years and up from 58.8 in August.
“Much of the gain is presumably linked to the aftereffects of the hurricanes. Nonetheless, manufacturing growth is
strong,” John Ryding, chief economist at RDQ Economics in New York, told Reuters.
The Dow moved higher as gains in shares of Intel and those of Walt Disney, recently up 2 percent and 1.5 percent
respectively, outweighed declines in shares of Apple and those of Exxon Mobil, recently 0.6 percent and 0.4 percent
weaker respectively.
The VIX, or the Chicago Board Options Exchange Volatility Index which measures expectations of future volatility in
stocks, slipped 0.1 percent to 9.50.
Shares of Metro fell after the Canadian grocer said it plans to sell assets and is committed to maintaining its BBB
credit rating as it agreed to buy Jean Coutu Group, a pharmacy chain, for about C$4.5 billion (US$3.6 billion).
Under the terms of the deal, Metro agreed to pay C$24.50 a share in cash and stock for Jean Coutu, the companies said in
a joint statement.
Asset sales under consideration include unloading the 32.2 million shares Metro owns in Alimentation Couche-Tard, the
owner of the Circle K convenience-store chain, Bloomberg reported.
“We’re not under pressure, there’s no critical timing, we will do this in an orderly fashion to make sure we maximize
proceeds,” Metro Chief Financial Officer Francois Thibault said on a conference call, commenting on Couche-Tard,
according to Bloomberg.
The company forecasts a debt to earnings ratio below 3 if it sells its entire stake in Couche-Tard, Bloomberg reported,
citing Thibault. The goal is to decrease the ratio to 2.5 percent over the next couple of years, he said.
Shares of Metro traded 1.4 percent weaker as of 1.17pm in Toronto, while those of Jean Coutu Group traded 1.7 percent
stronger at C$24.70.
In Europe, the Stoxx 600 Index finished the day with a 0.3 percent gain from the previous close. France’s CAC 40 Index
rose 0.4 percent, Germany’s DAX Index increased 0.6 percent, while the UK’s FTSE 100 Index climbed 0.9 percent.
(BusinessDesk)
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