U.S. Stocks Rise for Fourth Day on Earnings, ECB Stimulus By Joseph Ciolli and Callie Bost - 23 ม.ค. 2558 01:22:33 A trader works on the floor of the New York Stock Exchange. Photographer: Spencer Platt/Getty Images U.S. stocks rallied for a fourth day as the European Central Bank unveiled an expanded stimulus plan and regional banks and transportation companies posted better-than-forecast earnings. KeyCorp led gains among regional banks after fourth-quarter results topped analyst estimates. Southwest Airlines Co. jumped 7.3 percent as profit rose 71 percent on lower jet fuel prices. Union Pacific Corp. added 4.8 percent as a strengthening U.S. economy and growing construction market boosted traffic on the rails in the fourth quarter. EBay Inc. increased 5.5 percent after entering a standstill agreement with activist investor Carl Icahn. The Standard & Poor’s 500 Index (SPX ▲ 0.64% 2,045.14) gained 0.6 percent to 2,044.16 at 1:21 p.m. in New York. The gauge is trading near its average price for the past 50 days. The Dow Jones Industrial Average climbed 98.70 points, or 0.6 percent, to 17,652.98. Trading in S&P 500 companies was 19 percent above the 30-day average for this time of the day. Europe’s QE Quandary Draghi announced an expanded asset-purchase program, including private and public securities, of up to 60 billion euros ($69 billion) a month. The buying will continue through September 2016. The announcement came after the ECB kept benchmark rates unchanged at record lows. “Markets were expecting big and this sounds like a pretty big program, so that’s good news,” Karyn Cavanaugh, the New York-based senior market strategist at Voya Investment Management LLC, said by phone. Voya oversees $215 billion. “We were all expecting it and finally we got what we were looking for.” Central Banks In recent weeks, current Bundesbank President Jens Weidmann and his former deputy Sabine Lautenschlaeger, now on the ECB’s Executive Board, have been the loudest voices against more stimulus. Photographer: Krisztian Bocsi/Bloomberg A near-stagnant economy and the risk of deflation forced Draghi’s hand six years after the Federal Reserve took a similar step to inject cash into the U.S. The 67-year-old Italian’s gamble is that the benefits of quantitative easing outweigh the threat of a backlash in Germany and that the ECB ends up bailing out profligate, reform-wary governments. “This is a step in the right direction,” John Fox, director of research at Fenimore Asset Management in Cobleskill, New York, said in a phone interview. “It had been widely anticipated that they were going to do something, so they’re not surprising the market, but they still gave investors something positive.” The ECB’s shift exacerbates an emerging global divergence in monetary policy. While the Fed is now considering when to tighten credit, central banks in Denmark, Turkey, India, Canada and Peru all announced surprise rate cuts in the past week. The Swiss National Bank shocked investors by dropping a cap on the franc. In the U.S., three rounds of Fed stimulus helped the S&P 500 more than triple from a bear-market low in March 2009. The central bank ended its quantitative easing program three months ago. Earnings Season U.S. stocks rose for a third day on Wednesday as energy shares rallied and speculation grew that the ECB will provide more stimulus. The S&P 500 has climbed 2.6 percent following its second five-day slide this year as investors have weighed earnings reports and oil held above an almost six-year low set Jan. 13. The gauge is about 2 percent from its all-time high reached Dec. 29. The S&P 500 has moved 1.2 percent from its lowest to highest levels on Thursday. That’s the 15th straight swing of more than 1 percent intraday, the longest stretch since an 18-day run ending on June 21, 2012, data compiled by Bloomberg show. Market Volatility Daily moves in the U.S. equity benchmark have almost doubled from 2014 as oil’s decline spurred concerns about deflation and earnings estimates fell the most since 2009. While investors are the most rattled they’ve been since Europe’s debt crisis more than two years ago, an accelerating U.S. economy should calm them down, according to a Jan. 20 client note from Goldman Sachs derivatives strategists. A majority of those surveyed in a Bloomberg poll forecast that the S&P 500 will rise in the next six months, while only a quarter see it declining. The index is trading at 16.9 times the projected earningsof its members, according to data compiled by Bloomberg. Valuations reached a five-year high at the end of last year. Capital One Financial Corp. and Starbucks Corp. are among 16 companies reporting earnings on Thursday. Profit at S&P 500 companies climbed 0.8 percent in the last three months of 2014, analysts predict, down from an October estimate of 8.1 percent. Economic data on Thursday showed more Americans than forecast filed applications for unemployment benefits last week, a sign of lingering holiday turnover. Transportation Shares Leon Cooperman, who runs Omega Advisors Inc., said stocks can extend their gains as the economy improves and corporate profits rise. “There’s no basis to call for a market peak,” Cooperman, 71, said today in an interview on Bloomberg Television with Betty Liu. “It could be a couple more years.” Seven out 10 major industries in the S&P 500 advanced. Financial, consumer-discretionary and technology shares had the biggest gains, increasing more than 1 percent. The Dow Jones Transportation Average rallied for a fourth day. Union Pacific Corp. gained the most since October after quarterly profit topped analysts’ estimates on higher cargo shipments. A Bloomberg index of U.S. airlines rose to the highest since January 2001. United Continental Holdings Inc. and Southwest Airlines predicted that fuel costs will be at their lowest in more than five years this quarter, helping boost profits in a period where travel demand typically slows. KeyCorp added 6.5 percent as fourth-quarter revenue and earnings topped estimates. City National Corp. surged 18 percent after Royal Bank of Canada agreed to buy the Los Angeles-based banker to the stars for about $5.4 billion. Other regional banks rallied. Regions Financial Corp., Hudson City Bancorp Inc. and M&T Bank Corp. soared more than 3.2 percent. EBay Jumps EBay increased 5.5 percent. The company is cutting 2,400 positions, buying back shares and entering into a standstill agreement with Icahn as the company prepares to split its marketplace and payments businesses. EBay also said it’s exploring options for its enterprise unit, including a sale or initial public offering, and is adding three new board members, including a representative for Icahn, who had pushed the company to split up. Google Inc. climbed 2.3 percent and Apple Inc. advanced 1.6 percent. Avon Products Inc. rose 15 percent, the most in the S&P 500, after dealReporter said the company has been having talks with TPG about a potential transaction, citing industry sources. Phone companies had the biggest decline among S&P 500 groups, dropping 1.6 percent. Verizon Communications Inc., the largest U.S. wireless carrier, tumbled 2.2 percent after missing analysts’ fourth-quarter profit estimates as a surge in sales of deeply discounted phones squeezed margins. AT&T Inc. lost 1.5 percent. American Express Co. fell 3.1 percent, the most in the Dow, after reporting a fourth-quarter profit that missed some analysts’ estimates and saying it would cut more than 4,000 jobs this year. Energy companies slumped 0.5 percent, snapping a three-day rally, as West Texas Intermediate oil slid 1.8 percent after a government report showed that U.S. crude supplies surged the most in almost 14 years. Chesapeake Energy Corp. and Denbury Resources Inc. lost at least 3 percent.
Posted on: Fri, 23 Jan 2015 12:22:09 +0000
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