sunny.png
Sunday January 19th, 2020 10:40AM

US stocks return to records following strong earnings

By The Associated Press
Related Articles
  Contact Editor

NEW YORK (AP) — U.S. stocks pushed to record heights Friday following strong profit reports from Google's parent company, Twitter and other big corporations.

Companies are nearly midway through earnings reporting season, and results have generally been better than the dismal expectations that analysts had coming into it. A government report on Friday also showed that U.S. economic growth slowed in the spring, but it was still better than economists expected.

All the reports are emblematic of an economy that's strengthening but still shadowed by a pile of concerns, which only bolsters investors' expectations for the Federal Reserve to cut interest rates at its meeting next week. It would be the first cut in more than a decade, when the Fed was trying to shock the economy out of the Great Recession.

The S&P 500 index rose 22.19 points, or 0.7%, to 3,025.86 and passed its prior record set on Wednesday. The Dow Jones Industrial average gained 51.47, or 0.2%, to 27,192.45, and the Nasdaq composite also set a record after jumping 91.67 points, or 1.1%, to 8,330.21.

Friday's report on the U.S. economy showed that consumer spending remains strong, and employers continue to add jobs every month. But businesses are hesitant to invest, and manufacturing worldwide has slowed amid President Donald Trump's trade war. Inflation also remains low.

Lower interest rates could boost economic activity and goose inflation higher. Investors also see them as a shot of adrenaline for stocks and other risky investments. The European Central Bank earlier this week held its key interest rate steady, but it made clear that more stimulus is on the way.

In the United States, investors think there's virtually 100% certainty that the Fed will cut its benchmark short-term rate on Wednesday, likely by a quarter of a percentage point from its current range of 2.25% to 2.50%.

"Any time you hit a record high, you ask: Is this justified?" said David Joy, chief market strategist at Ameriprise. "Well, it's justified based on the easing cycle that central banks are on, and the absolute level of earnings helps. But growth is sluggish and moderating, earnings are flattish and we've got this overhang of, let's call it geopolitical uncertainty. We say, 'Let's be a little cautious here.'"

If S&P 500 companies are able to report flat earnings growth for the second quarter, it would be a small victory. Analysts came into this earnings reporting season expecting a drop of roughly 3% in earnings per share for S&P 500 companies, according to FactSet.

So far this earnings season, about 44% of companies in the S&P 500 have already reported, and their earnings per share have been up a little more than 1% from year-ago levels. That means analysts are now forecasting a more modest drop for the S&P 500 index overall, closer to 2%.

Alphabet, Google's parent company, soared to one of the biggest gains in the S&P 500 Friday after it joined the list of companies reporting stronger-than-expected profits. It also allayed investors' concerns about advertising trends after reporting stronger revenue growth than Wall Street forecast. Alphabet shares surged 9.6% for their best day in four years.

Twitter jumped 8.9% after it reported stronger user numbers and revenue for the second quarter than investors expected. The big gains for Alphabet and Twitter meant stocks in the communications sector were the best performers in the S&P 500, up 3.2%. That was more than double the gain of any of the other 10 sectors that make up the index.

Sprint and T-Mobile US also jumped after the Justice Department approved their merger, despite fears that the deal could bring higher prices and less competition for customers. Sprint rose 7.4%, and T-Mobile US gained 5.4%.

Treasury yields held relatively steady, as investors continue to settle on expectations for the Federal Reserve to cut short-term rates by only a quarter of a percentage point next week, rather than the half-point cut that some investors were anticipating earlier.

The 10-year Treasury yield remained at 2.07%. The two-year yield, which is more influenced by the Fed's movements, rose to 1.86% from 1.84% late Thursday.

In overseas markets, the French CAC 40 rose 0.6%, the German DAX gained 0.5%. and the FTSE 100 in London climbed 0.8%. Japan's Nikkei 225 slipped 0.5%, the South Korean Kospi fell 0.4% and the Hang Seng in Hong Kong lost 0.7%.

Benchmark U.S. oil rose 18 cents to settle at $56.20 a barrel. Brent crude, the international standard, rose 7 cents to $63.46 a barrel. Wholesale gasoline fell 1 cent to $1.87 per gallon. Heating oil declined 1 cent to $1.90 per gallon. Natural gas fell 7 cents to $2.17 per 1,000 cubic feet.

Gold rose $4.60 to $1,418.50 per ounce, silver fell 1 cent to $16.33 per ounce and copper fell 2 cents to $2.68 per pound.

The dollar fell to 108.71 Japanese yen from 108.73 yen on Thursday. The euro strengthened to $1.1126 from $1.1144.

  • Associated Categories: Associated Press (AP), AP Business, AP Business - Corporate News, AP Business - Economy, AP Business - Financial Markets, AP Business - Industries, AP Business - Financial Services
© Copyright 2020 AccessWDUN.com
All rights reserved. This material may not be published, broadcast, rewritten, or redistributed without permission.
Ebony and Jet photo archive sale sparks relief, anxiety
The sale of the photo archive of Ebony and Jet magazines chronicling African American history is generating relief among some who worried the historic images may be lost
4:48PM ( 8 minutes ago )
Alex and Ani jewelry accuses Bank of America of gender bias
Jewelry maker Alex and Ani has filed a $1.2 billion lawsuit alleging that "gender bias and greed" by Bank of America have led to a financial "death spiral" at the Rhode Island-based company
4:44PM ( 12 minutes ago )
US stocks return to records following strong earnings
U.S. stocks pushed to record heights Friday following strong profit reports from Google's parent company, Twitter and other big corporations
4:29PM ( 26 minutes ago )
Associated Press (AP)
Smugglers offer cash to troops, others to drive migrants
U.S. Border Patrol agents say smugglers lure troops, police and others with offers of quick cash if they drive migrants on short jaunts through a heavily secured US border zone near San Diego.
3:20PM ( 1 hour ago )
Trump refuses to shield Apple's Mac Pros from China tariffs
President Donald Trump is vowing to slap tariffs on Apple's Mac Pros if the company shifts production of the computer from Texas to China
3:18PM ( 1 hour ago )
North Korea, China top Pompeo agenda on Asia trip
Secretary of State Mike Pompeo heads to Asia next week with an agenda dominated by a stalemate in North Korea nuclear talks and impasses with China over trade, Taiwan and the South China Sea.
3:16PM ( 1 hour ago )
AP Business
US stocks reach records following strong earnings
U.S. stock indexes climbed Friday following strong profit reports from Google's parent company, Twitter and other big companies. The S&P 500 was on track to close out its third winning week in the last four
2:24PM ( 2 hours ago )
The Latest: T-Mobile expects to close Sprint deal in 2019
T-Mobile CEO John Legere says he's hoping to engage with state attorneys general who have sued to block its $26.5 billion takeover of Sprint
1:38PM ( 3 hours ago )
McDonald's sales growth impresses in 2Q
McDonald's records best same-store global same-store sales growth since 2012.
12:09PM ( 4 hours ago )
AP Business - Corporate News
Indonesia's Widodo tells AP he'll push economy, labor reform
Indonesia's president vows he will push ahead with sweeping and potentially unpopular economic reforms, saying he will not have political constraints in his final term in office
1:35PM ( 3 hours ago )
The Latest: Critics say telecom deal bad for consumers
Some industry watchers say T-Mobile's $26.5 billion takeover of Sprint is a bad deal for consumers.
1:15PM ( 3 hours ago )
US officials: Iran test-launched a medium-range missile
U.S. officials say Iran test-launched a medium-range ballistic missile, continuing a program criticized by the U.S. and other nations
12:23PM ( 4 hours ago )
AP Business - Economy
House passes bipartisan budget bill with Trump support
The Democratic-controlled House has easily passed bipartisan debt and budget legislation
6:11PM ( 22 hours ago )
Stocks slide over disappointing earnings reports
U.S. stocks retreated from record highs as large companies delivered weak earnings reports and disappointing forecasts
5:24PM ( 23 hours ago )
Puerto Rico governor's resignation is met with cheers
Anger has given way to jubilation in the streets in Puerto Rico, where Gov. Ricardo Rosselló announced his resignation overnight
4:03PM ( 1 day ago )
AP Business - Financial Markets
Eversource gives up on Northern Pass hydropower project
The Northern Pass hydropower project that promised to bring hydropower from Canada to southern New England is dead after nearly a decade of protests and court fights
1:56PM ( 3 hours ago )
The Latest: Fires spike around France during heat wave
French emergency officials say fires devastated some 6,500 hectares (16,000 acres) of forests, farm fields and other land on Thursday during a heat wave.
11:30AM ( 5 hours ago )
Gold deal ends among European central banks
The European Central Bank says it and 21 other central banks are letting a formal agreement regulating gold sales expire, saying the deal once aimed at stabilizing the market for the precious metal is no longer needed
10:29AM ( 6 hours ago )
AP Business - Industries
European Central Bank signals possible rate cut
The European Central Bank is signaling it could cut interest rates or restart bond purchases in coming weeks to support weakening economy growth in the face of tensions over trade
8:10AM ( 1 day ago )
Turkish central bank cuts key rate deeply under new governor
Turkey's central bank has cut the key interest by 425 base points in a first monetary policy meeting under its new governor
7:19AM ( 1 day ago )
ECB council signs off on Lagarde as Draghi successor
The European Central Bank's governing council has signed off on the appointment of former International Monetary Fund head Christine Lagarde as the next head of Europe's top monetary authority
5:19AM ( 1 day ago )
AP Business - Financial Services
Ebony and Jet photo archive sale sparks relief, anxiety
The sale of the photo archive of Ebony and Jet magazines chronicling African American history is generating relief among some who worried the historic images may be lost
4:48PM ( 8 minutes ago )
Alex and Ani jewelry accuses Bank of America of gender bias
Jewelry maker Alex and Ani has filed a $1.2 billion lawsuit alleging that "gender bias and greed" by Bank of America have led to a financial "death spiral" at the Rhode Island-based company
4:44PM ( 12 minutes ago )
Cowboys' Elliott skips camp start with 2 years left on deal
Ezekiel Elliott is holding out of training camp with the Dallas Cowboys with two years remaining on the rookie contract of the two-time NFL rushing champ
4:21PM ( 35 minutes ago )
Grasshoppers on the go make migratory stop in Las Vegas area
A migration of mild-mannered grasshoppers sweeping through the Las Vegas area is being attributed to wet weather several months ago
4:13PM ( 42 minutes ago )
Trump says Guatemala signing deal to restrict asylum cases
President Donald Trump says Guatemala is signing an agreement to restrict asylum applications to the U.S. from Central America
4:12PM ( 44 minutes ago )