Friday 24th February 2012 |
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Wall Street advanced as investors chose to focus on the good news—the number of Americans filing for unemployment benefits held at the lowest level in four years, underpinning hopes that the consumer will help sustain the recovery in the world's largest economy at a time when Europe's outlook is deteriorating.
Applications for US jobless benefits were steady in the week ended February 18 at 351,000, the lowest level since March 2008. That was better than expected.
“The labour market is better, and a stronger labour market and stronger consumer spending go hand in hand,” Joseph LaVorgna, chief US economist at Deutsche Bank Securities in New York, told Bloomberg News. “Consumers are going to continue to spend.”
In early afternoon trading in New York, the Dow Jones Industrial Average advanced 0.31 percent, the Standard & Poor's 500 Index gained 0.35 percent and the Nasdaq Composite Index climbed 0.61 percent.
US corporate earnings remain a mixed bag this quarter. Among retailers that just reported earnings was Target, which beat expectations, and Kohl's, which forecast a 2012 profit that disappointed.
Target shares rose more than 1 percent, while Kohl's dropped 5 percent.
Meanwhile, shares of Hewlett-Packard sank more than 5 percent after the world's biggest computer maker reported a drop in earnings, adding it may need several years to turn itself around.
Even so, there are still more surprises to the upside.
According to Thomson Reuters data through Thursday morning, of the 446 companies in the S&P 500 that have reported earnings, 63 percent surpassed analysts' expectations.
In Europe, however, the earnings season has been bleak. Of the 204 companies on the Stoxx 600 that have reported quarterly earnings so far, 102 have fallen short of analyst estimates, while 90 have bettered them, according to data compiled by Bloomberg.
Adding to clear indications of tough times ahead was the European Commission's forecast that the 17-nation euro economy will shrink 0.3 percent in 2012. That compares with a November forecast for 0.5 percent expansion. The commission forecast contractions in Italy and Spain, by 1.3 percent and 1 percent respectively.
In Europe, the Stoxx 600 index dropped 0.2 percent on for the day.
The Germans seem to remain optimistic, though.
The Munich-based Ifo institute said its business climate index, based on a survey of 7,000 executives, climbed to 109.6 in February from 108.3 in January. That’s the fourth straight gain and surpassed a forecast for an increase to 108.8, according to the median estimates of economists in a Bloomberg survey.
Today, Greece's parliament endorsed a bond swap for private holders of its debt as it moves towards cutting its liabilities by 100 billion euros. The swap starts on Friday.
(BusinessDesk)
BusinessDesk.co.nz
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