Dow Jones finishes up
US investors put their interest rate worries on hold and sent stocks higher on Wall Street today after strong earnings reports from Time Warner and Procter & Gamble restored some of the market’s flagging confidence.
Time Warner’s $1bn (€781,730,000) dollar profit, compared to a loss a year ago, exceeded the market’s expectations and gave hope to investors disappointed with the media sector’s recent performance. A strong showing from P&G, the consumer products company, assuaged fears of a drop in consumer spending.
Yet with a tropical storm threatening Florida and energy usage soaring in the sweltering eastern US, rising energy prices threatened to stall the market’s momentum for the rest of the week.
A barrel of light crude was quoted at 75.81, up 90 cents, on the New York Mercantile Exchange, while prices for natural gas – widely used in electricity generation – are sharply higher this week.
Nonetheless, investors sought bargains after two days of selling, pressing ahead despite the Labour Department’s jobs report coming tomorrow and the Federal Reserve’s latest decision on interest rates, due next week.
“It’s probably wrong to expect much more from the stock market than this when you still have these questions about the Fed that are unanswered,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisers. ”We have the employment numbers on Friday which will help us with some answers, but for today, this is nice, but uninspiring.”
The Dow Jones industrial average rose 74.20, or 0.67%, to 11,199.93.
Broader stock indicators also moved higher. The Standard & Poor’s 500 index climbed 7.63, or 0.6%, to close at 1,278.55, and the Nasdaq composite index gained 16.82, or 0.82%, to end the day at 2,078.81.
Bonds also moved higher after two days of sideways trading, with the yield on the benchmark 10-year Treasury note falling to 4.96% from 4.98% on Tuesday. The dollar was mixed against other major currencies, while gold prices rose.
Most analysts believed the day’s stock runup would be short-lived, given the fact that the monthly job’s report has been increasingly difficult to predict - as has the Fed’s intentions toward interest rates.
Tropical Storm Chris, expected to strengthen into a hurricane as it heads for the oil-rich Gulf of Mexico, could also come into play towards the end of the week.
“If you see that storm head into the gulf, all bets are off,” said Bill Groenveld, head trader for vFinance Investments. “You’re going to see oil spike higher than it is now, and that’ll take things right back down.”
For now, however, earnings news dominated Wall Street’s thinking. Time Warner added 42 cents to 16.67 after posting strong revenue gains in its telecommunications divisions, though most of its media holdings posted tepid results. The conglomerate also announced a revamp of its America Online division, in which it will now provide most of its services for free.
Procter & Gamble saw its quarterly profit climb 36% on higher revenues from price increases. P&G, which beat analysts’ expectations by a penny per share, gained 2.36, or 4.2%, to 58.29.
Ford rose 38 cents, or 5.8%, to 6.96 after The Wall Street Journal reported the company has launched a strategic review of ailing business units that could lead to a sale of those divisions or broader strategic alliances with other vehicle manufacturers. The review is headed by a former investment banker who specialises in mergers and acquisitions.
Advancing issues outnumbered decliners by more than 2 to 1 on the New York Stock Exchange, where volume totalled 1.76 billion shares, compared with 1.68 billion traded on Tuesday.
The Russell 2000 index of smaller companies was up 6.92, or 1%, at 696.81.
