Stocks rise smartly in the US
Stocks rose smartly in the United States today as stronger-than-expected earnings from FedEx and Morgan Stanley put investors’ inflation fears on the back burner. The Dow Jones industrial average gained more than 100 points.
Morgan Stanley’s second-quarter profit more than doubled from a year earlier and FedEx saw a 27% jump in its fiscal fourth-quarter earnings. The results quietened concerns about the possibility of an economic slowdown caused by rate rises from the Federal Reserve.
“With the backdrop of rising interest rates, if we’re still able to see good earnings for the second quarter, it will bode well for the market,” said Jim Herrick, director of equity trading at Baird & Co.
Every sector except utilities was trading higher by the end of the session, with the energy and materials sectors seeing the most dramatic gains.
The Dow Jones industrial average rose 104.62, or 0.95%, to 11,079.46.
Broader stock indicators were also higher. The Standard & Poor’s 500 index rose 12.08, or 0.97%, to 1,252.20, and the Nasdaq composite index rose 34.14, or 1.62%, to 2,141.20.
Advancers led decliners by roughly 3 to 1 on the New York Stock Exchange. Small cap stocks also rallied. The Russell 2000 index of smaller companies rose 13.17, or 1.94%, to 690.67.
Bonds were flat, with the yield on the 10-year Treasury note at 5.15%. The US dollar fell against most major currencies. Gold prices were higher.
Crude oil futures were higher after the US Department of Energy reported that gasoline inventories grew at a slow pace last week, despite high production levels. A barrel of light crude settled at 70.33dollars, up 99 cents in trading on the New York Mercantile Exchange.
The day’s trading was the latest in a series of rollercoaster sessions on Wall Street. Inflation jitters have been shaking stocks recently and May was Wall Street’s worst month of the year by far, as investors sold off on fears the Fed would continue its streak of rate hikes. The major indexes swung to losses in early June before rebounding sharply last week.
“I think the correction we’ve had may have been overdone,” said Ed Keon, chief investment strategist with Prudential Equity Group in New York. “If we get even the slightest bit of encouragement from the Fed and if earnings are as good as I think they’ll be, this could be a pretty good summer for stocks.”
Companies involved in petrol refining jumped after a government report suggested that fuel demand isn’t being curbed by high prices.
Anadarko Petroleum, a natural gas company, rose 1.54dollars to 47.92dollars; Noble Corp., a drilling company, rose 3.41dollars to 69.38dollars and BJ Services Co., a pressure-pumping services company, rose 1.21dollars to 34.51dollars.
Materials stocks, such as copper producer Phelps Dodge and US Steel, rose sharply. Phelps Dodge rose 3.15dollars to 80.91dollars and US Steel rose 2.80dollars to 63.65dollars.
Morgan Stanley, the second-largest US securities firm, rose 2.46dollars, or 4.3%, to 59.48dollrs after its second-quarter profits jumped. The company reported record revenue driven by stronger underwriting, merger and acquisition, and trading results. The results far exceeded analysts expectations.
FedEx Corp. rose 5.54dollars, or 5.1%, to 113.86dollars, after it reported a 27% jump in fourth-quarter earnings, citing solid economic growth in US and international markets. FedEx is the world’s largest express shipping company and its results beat Wall Street expectations by a wide margin.
Volume on the New York Stock Exchange was 1.66 billion shares, up from 1.50 billion the previous session.
