Stocks rise as investors focus on solid earnings
Asian shares mostly higher, Chinese markets remain closed
NEW YORK, Jan 29, (AP): US stocks rose broadly in morning trading as investors focused on solid earnings from several big companies. The gains were temporarily curtailed earlier on a report that Americans pulled back on signing contracts to buy homes last month.
Apple gained ground after reporting solid profit gains, and industrial stocks also rose. Boeing rose 2.2% and railroads climbed on a good report from Norfolk Southern. General Electric surged 9.6% after a strong showing from its aviation business pushed profits above expectations.
Victoria’s Secret parent company L Brands soared following a report that its long-serving CEO might leave.
Homebuilders slumped following the weak housing report. PulteGroup fell 3.6% and Hovnanian shed 3.4%.
Communications stocks lagged the market. AT&T fell 2.5%.
Wall Street is in the middle of a busy week for corporate earnings. Facebook, Microsoft and Tesla will release earnings later Wednesday. Coca-Cola, UPS, Amazon and Visa will report results on Thursday. Caterpillar and Exxon Mobil will report results on Friday.
The deadly coronavirus is still a potential threat to the global economy, but Wall Street has managed to set aside those concerns, for now. The lockdown in China has trapped more than 50 million people in the most farreaching disease control measures ever imposed. The outbreak has infected more than 6,000 on the mainland and abroad.
The S&P 500 index rose up 0.3% as of 11:14 a.m. Eastern time. The Dow Jones Industrial Average rose 142 points, or 0.5%, to 28,861. It was up as much as 221 earlier. The Nasdaq rose 0.2%. The Russell 2000 index of smaller company stocks fell 0.1%.
Bond prices rose. The yield on the 10-year Treasury fell to 1.62%.
L Brands skyrocketed 13.1% following reports that the owner of Bath & Body Works and Victoria’s Secret could change leadership and sell off some of its parts. The Wall Street Journal reported that Leslie Wexner, who has served as CEO for more than five decades, is in talks to step down. It also said the company is considering a full or partial sale of its lingerie business.
Apple rose 2.8% after a strong holiday season helped propel profits beyond Wall Street forecasts. The iPhone maker’s surprisingly good report marks a turnaround from a year ago when sales of its marquee product appeared to be sliding. The company is also seeing gains in sales of smartwatches, digital services and wireless earbuds.
Norfolk Southern climbed 6.6% after the railroad reported surprisingly good fourth-quarter profits on cost cuts. The railroad industry has been experiencing weak demand for freight hauling and the company is trying to operate on a tighter schedule and move more freight with fewer people.
Union Pacific rose 2.1% and CSX climbed 2.4%.
Asian shares mostly higher after rebound on Wall Street
Shares advanced in most Asian markets on Wednesday after a rebound on Wall Street that reversed most losses from a sell-off the day before.
Hong Kong’s Hang Seng dropped 2.8%, to 27,174.43 after reopening from Lunar New Year holidays, while other Chinese markets remained closed.
Tokyo’s Nikkei 225 index gained 0.7% to 23,379.40 and in South Korea the Kospi picked up 0.5% to 2,188.04. Australia’s S&P ASX/200 rose 0.5% to 7,031.50, while the Sensex in India climbed 0.8% to 41,283.40. Shares also rose in Southeast Asia, apart from Kuala Lumpur, which fell 1.4% as trading resumed after the Lunar New
Year.
Investors placed their concerns about the virus’ potential economic impact on the back burner on Tuesday and snapped up U.S. stocks beaten down earlier in the week, particularly chipmakers and other technology companies. The sector notched the biggest gain Tuesday and powered much of the rally.
But the potential for still more virus-related scares remains, analysts cautioned.
“Markets may enjoy one or two days in the sun. I would be remiss in my role as the voice of reason if I did not caution investors to be wary of chasing, what may be temporary, dead cat bounces,” Jeffrey Halley of Oanda said in a commentary, “Until we have much more clarity on the controlling of the Wuhan virus outbreak at the very least.”
Bond prices fell, sending yields higher following a significant drop a day earlier. The yield on the 10-year Treasury climbed to 1.65% from 1.60% late Tuesday.
Despite the rebound, the major US indexes are still down for the week. The losses have hit smaller company stocks hardest, erasing the Russell 2000’s gains for the year.
US stocks were running at all-time highs at the start of the month. An index measuring volatility in the market was running at 12-month lows and the benchmark S&P 500 had climbed around 13% since early October after Washington and Beijing announced they would sign a preliminary trade deal.
That set the market up for a pullback, and investors’ jitters over the virus outbreak centered on the central Chinese city of Wuhan fit the bill.
“It may be symptomatic about how bullish overall people have been and how much money still sits on the sidelines,” Frederick said. “People are just looking for any opportunity to get a bargain right now, but it could ultimately end up being a little bit risky to do that.”
Hong Kong has joined much of China in seriously restricting travel by cutting all rail links to the mainland as of Friday. China’s containment efforts began with the suspension of plane, train and bus links to Wuhan and has now expanded to 17 cities with more than 50 million people in the most far-reaching disease-control measures ever imposed.
The United States and several other nations were taking steps to airlift citizens out of a Chinese city at the center of the outbreak. Still, US health officials said Tuesday that, for now, the risks to Americans is very low.
Otherwise, it’s a heavy week for corporate earnings. Boeing, McDonald’s, Facebook and Microsoft will all report results on Wednesday. Other big names reporting this week include Coca-Cola, Amazon, Caterpillar and Exxon Mobil.