While you were sleeping Wall Street gains, Netflix jumps

Wednesday 24th April 2013

Wall Street rallied amid optimism about the outlook for companies including Netflix as they beat earnings expectations.

Shares of Netflix soared, last up 23.7 percent, after the company yesterday said it had added 2 million new US customers last quarter.

Of the 131 Standard & Poor's 500 Index companies that have reported their quarterly results so far, 73 percent have exceeded analysts' predictions for earnings, according to Bloomberg.

In afternoon trading in New York, the Dow Jones Industrial Average gained 0.76 percent, the Standard & Poor's 500 Index advanced 0.89 percent, while the Nasdaq Composite Index climbed 0.99 percent.

A report posted on the Associated Press Twitter feed, which later turned out to be false, about explosions at the White House that had hurt US President Barack Obama, briefly weighed on stocks.

The latest data provided further evidence that momentum has slowed in the world's biggest economy, though the data also showed continuing signs of resilience.

Markit said its preliminary factory purchasing managers' index slid to 52.0 in April from 54.6 last month. Yet, new home sales rose 1.5 percent to a seasonally adjusted annual rate of 417,000 units in March, according to Commerce Department data.

"The numbers are not suggesting that the economy is surging, but none of them are really showing that the economy is falling off the cliff," Jim O'Sullivan, chief US economist at High Frequency Economics in Valhalla, New York, told Reuters.

In Europe, the Stoxx 600 Index climbed 2.4 percent from the previous close. The UK's FTSE 100 advanced 2 percent, Germany's DAX rose 2.4 percent, while France's CAC 40 posted a 3.6 percent gain.

The Markit Eurozone PMI Composite Output Index was unchanged on March's reading of 46.5 in April, according to the flash estimate. The deepening downturn is bolstering expectations that the European Central Bank might cut its record-low interest rate to help the region's economy.

"Although the PMI was unchanged in April, the survey is signalling a worrying weakness in the economy at the start of the second quarter, with signs that the downturn is more likely to intensify further in coming months rather than ease," Chris Williamson, chief economist at Markit, said in a statement.

"Policymakers will at least be relieved to see inflationary pressures cooling, which could further open the door to renewed policy stimulus."

It was a similar story in China where manufacturing grew more modestly than forecast in April. The preliminary PMI was at 50.5 this month, compared with a final 51.6 in March, according to HSBC and Markit.

"Beijing is expected to respond strongly to sustain the economic recovery by increasing efforts to boost domestic investment and consumption in the coming months," Hongbin Qu, chief economist, China & co-head of Asian economic research at HSBC said in a statement.

BusinessDesk.co.nz

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