Friday 24th October 2014
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Wall Street climbed, lifted by better-than-expected earnings from 3M and Caterpillar, and renewed optimism that the US economy might sustain its pace of recovery.
In afternoon trading in New York, the Dow Jones Industrial Average climbed 1.60 percent, the Standard & Poor’s 500 Index added 1.51 percent, while the Nasdaq Composite Index gained 1.80 percent.
Rallies in shares of 3M and those of Caterpillar, up 5.3 percent and 5 percent respectively, propelled the advance in the Dow.
"We’ve continued to focus on what we can control—cost management and operational execution," Caterpillar Chief Executive Officer Doug Oberhelman said in a statement. The company also upgraded its full-year profit outlook.
With 35 percent of the S&P 500 having reported, 69.5 percent have exceeded profit expectations, according to Thomson Reuters data, above the long-term average of 63 percent.
"It’s good to see good numbers in any company, but if we’re looking at headwinds like currency and slowing global growth, seeing multinationals like Caterpillar and 3M post solid beats gives us confidence that economic growth is holding on and probably better than the market is currently expecting," Phil Orlando, chief equity market strategist at Federated Investors in New York, told Reuters.
Other good news arrived in the latest economic data. Initial claims for state unemployment benefits rose 17,000 to a seasonally adjusted 283,000 for the week ended October 18, remaining near 14-year lows. Separately, the Conference Board’s index of US leading indicators rose 0.8 percent in September, following a flat reading in August.
"There is no sign in these very timely data of weaker global growth or turmoil in the markets causing US growth to falter," Jim O'Sullivan, chief US economist at High Frequency Economics in Valhalla, New York, told Reuters.
Even so, Markit’s preliminary US manufacturing purchasing managers index slipped to 56.2 in October, from 57.5 last month.
"The source of the slowdown appears to be weaker economic growth in key markets such as the euro zone, China and other emerging markets, which has hit export performance," Chris Williamson, chief economist at Markit, said in a statement.
There were disappointments too. Shares of Yelp plunged, last 16 percent lower, after the company’s forecast for fourth-quarter sales fell short of expectations. Many analysts downgraded their price targets on the stock.
Shares of AT&T dropped, last down 2.7 percent, after the company reported revenue growth that failed to meet expectations.
In Europe, the Stoxx 600 ended the day with a 0.7 percent gain from the previous close. The UK’s FTSE 100 Index rose 0.3 percent, while Germany’s DAX gained 1.2 percent and France’s CAC 40 advanced 1.3 percent.
Markit’s purchasing managers index for euro-area manufacturing rose to 50.7 in October, up from 50.3 last month. That was better than the 49.9 reading economists surveyed by Bloomberg News had predicted.
A European Commission report showed stronger-than-expected euro-zone consumer confidence for October.
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