While you were sleeping: McDonald’s, Boeing rally

Friday 30th January 2015

Wall Street advanced, as did the US dollar, amid optimism about the outlook for the economy and corporate profits in the US.

In afternoon trading in New York, the Dow Jones Industrial Average rose 0.75 percent, while the Standard & Poor’s 500 Index added 0.19 percent. The Nasdaq Composite Index slipped 0.03 percent.

Gains in shares of McDonald’s and those of Boeing, each up 4.9 percent, helped propel the Dow higher.

Shares of McDonald’s climbed after the company named a new chief executive officer.

Shares of Qualcomm plunged, last down 11.3 percent, after the company downgraded its 2015 forecast for revenue and profit. The US listed shares of China’s Alibaba also fell sharply after its revenue missed expectations, dragging Yahoo lower too.

The latest weekly jobs data were better than expected, further strengthening the Fed’s signal this week that it remains on track to lift interest rates later this year. Initial claims for state unemployment benefits fell 43,000 to a seasonally adjusted 265,000 for the week ended January 24, the lowest since April 2000, according to the Labor Department.

"Claims are a welcome shot in the arm for those believing the economy is strong,” Chris Rupkey, chief financial economist at MUFG Union Bank in New York, told Reuters. “The US remains an oasis of prosperity in the world and will continue to do so.”

Even so, the latest housing data continued to disappoint. A report by the National Association of Realtors showed its pending home sales index unexpectedly dropped 3.7 percent in December to 100.7, following a downwardly revised 104.6 in November.

Shares of Exxon Mobil and Chevron fell, last down 1 percent and 0.7 percent respectively. West Texas Intermediate for March delivery dropped, last down 1.5 percent, to US$43.78 a barrel. Overnight Royal Dutch Shell said it would chop its capital spending budget in the year ahead.

“US stockpiles are still very high and the fundamentals are weak,” Gene McGillian, a senior analyst at Tradition Energy in Stamford, Connecticut, told Bloomberg Business. “The market will continue to come under pressure. There is really not anything bullish out there.”

In Europe, the Stoxx 600 Index finished the session with a 0.1 percent decrease from the previous close. The UK’s FTSE 100 Index fell 0.2 percent. Germany’s DAX Index rose 0.3 percent, while France’s CAC 40 Index gained 0.4 percent.

In Germany, a report showed consumer prices declined a larger than expected 0.5 percent from a year earlier. It was the first drop since 2009, and underpinned the European Central Bank’s new asset purchase program, announced last week, aimed at stoking inflation and the euro-zone economy.

“The mood is mixed,” Tobias Britsch, who helps oversee about US$27 billion at Meriten Investment Management, in Dusseldorf told Bloomberg Business. “On the one side you have [ECB President Mario] Draghi and the ECB which support markets with QE, on the other side you have the political uncertainty with Greece. And oil is the other story.”

BusinessDesk.co.nz

Comments from our readers

No comments yet