Stocks Jump on Corporate Earnings 10/23 15:35
A combination of strong company earnings and encouraging economic reports,
both in the U.S. and Europe, gave the stock market another day of solid gains
NEW YORK (AP) -- A combination of strong company earnings and encouraging
economic reports, both in the U.S. and Europe, gave the stock market another
day of solid gains on Thursday.
Caterpillar jumped after its third-quarter earnings report was better than
Wall Street analysts had been expecting. The company also raised its profit
outlook for the year. 3M, the maker of Post-it notes, industrial coatings and
ceramics, was among other companies that gained after releasing impressive
Investors were also cheered by a report that showed the number of people
applying for U.S. unemployment benefits remains at a historically low level,
suggesting that hiring is gaining steam. In Europe, a survey of businesses
eased concerns that the region may be slipping back into recession.
Solid company earnings are sending the stock market higher and helping it
recover from a jarring drop in mid-October that gave the Standard & Poor's 500
index its biggest slump in two years. The index has gained on five of the last
six days, and on Tuesday logged its biggest advance of the year.
"The economic backdrop here in the United States is continuing to look
strong. Earnings are validating that," said Karyn Cavanaugh, a senior market
strategist at Voya Investment Management.
The Standard & Poor's 500 index rose 23.71 points, or 1.2 percent, to
1,950.82. The Dow Jones industrial average climbed 216.58 points, or 1.3
percent, to 16,677.90. The Nasdaq composite rose 69.95 points, or 1.6 percent,
Eight of the ten sectors in the S&P 500 gained, led by a surge in industrial
companies after Caterpillar and 3M reported their earnings.
Caterpillar said that some belt tightening had helped it contend with a
slowing global economy. The company's CEO said he was hopeful that economic
growth would pick up next year. Caterpillar's stock rose $4.70, or 5 percent,
to $99.27. 3M gained $6.10, or 4.4 percent, to $145.05.
Companies in the S&P 500 have reported earnings growth of 5.5 percent for
the third quarter, according to analysts at S&P Capital IQ. The rate of growth
has slowed from 10.4 percent in the second quarter, but is forecast to pick up
in the final three months of the year.
Stocks had started the day higher, following gains in European indexes,
after a survey of the manufacturing and services sectors eased some fears that
the region could be falling back into recession.
Financial information company Markit said its composite purchasing managers
index for the 18-country bloc, a broad gauge of business activity, rose to 52.2
in October from 52 in September. Analysts had expected a small decline.
Readings above 50 suggest expansion.
Although the reports from Europe "weren't fantastic," they suggested that
the region would avoid sliding back into recession, said David Lebovitz, Global
Market Strategist at J.P. Morgan Funds. Concerns about the worsening growth
outlook in Europe helped push stocks sharply lower last week.
"It almost feels like the markets can breathe a sigh of relief for the time
being," Lebovitz said. "That, combined with the earnings numbers, is what's
driving the market."
European markets closed higher. France's CAC-40 rose 1.3 percent. Germany's
DAX gained 1.2 percent and Britain's FTSE 100 edged up 0.3 percent.
In energy trading, the price of oil rose sharply Thursday on reports of
lower production in Saudi Arabia and signs of strength in the U.S. economy.
The price of oil rose sharply on reports of lower production in Saudi Arabia
and signs of strength in the U.S. economy. Benchmark U.S. crude rose $1.57 to
close at $82.09 a barrel on the New York Mercantile Exchange. Brent crude, a
benchmark for international oils used by many U.S. refineries, rose $2.12 to
close at $86.83 on the ICE Futures exchange in London.
In other energy futures trading on the NYMEX, wholesale gasoline rose 5.1
cents to close at $2.207 a gallon, heating oil rose 2.6 cents to close at
$2.499 a gallon natural gas fell 3.7 cents to close at $3.622 per 1,000 cubic
In currency trading, the dollar was little changed against the euro, trading
at $1.2651. The dollar climbed to 108.16 yen. U.S. government bond prices fell.
The yield on the 10-year Treasury note rose to 2.28 percent from 2.22 on
In metals trading, gold fell $16.40 to $1,229.10 an ounce, silver fell seven
cents to $17.16 an ounce and copper rose two cents to $3.04 a pound.