While you were sleeping: Earnings, data bolster Wall St

Thursday 6th August 2015

Wall Street moved higher as better than expected corporate earnings such as from Priceline and a better than expected report on US services outweighed disappointing sales from Walt Disney and lower than expected private payrolls growth.

In late trading in New York, the Dow Jones Industrial Average added 0.07 percent, the Standard & Poor’s 500 Index rose 0.24 percent, while the Nasdaq Composite Index gained 0.86 percent.

ADP’s private payrolls report showed US companies added a lower than expected 185,000 workers in July, the smallest increase since April. Economists had expected a 215,000 increase.

"I don't think the Fed is ready to raise rates and is looking for reasons to not raise," Stansberry trading analyst Jeff Clark told Reuters. "The data supports the idea that the economy isn't overheating and so there isn't an overwhelmingly compelling reason for the Fed to raise rates in September.”

Friday’s government non-farm payrolls data is expected to show US employers added 225,000 jobs in July, while the jobless rate held at 5.3 percent.

To be sure, the Institute for Supply Management's services sector index climbed to 60.3 in July, up from 56 in June. It was the highest reading in a decade.

This bolstered the case for a September rate hike, some say.

"This will be interpreted as very good news for the Fed and will be seen as further confirmation of progress towards meeting its growth targets," Cheng Chen, an economist at TD Securities in New York, told Reuters. "At this point, we continue to expect the Fed to raise rates at the September meeting."

In the Dow, gains in shares of UnitedHealth and those of Wal-Mart, last up 2.5 percent and 1.9 percent respectively, outweighed a plunge in shares of Walt Disney, last 9.3 percent weaker.

Walt Disney shares slid on disappointing sales. On the flip side, shares of Priceline jumped more than 6 percent as the company posted earnings that exceeded expectations.

Four out of five S&P 500 members have reported results this season, with about three-quarters beating profit estimates and half topping sales projections, according to Bloomberg.

While earnings are important, investors are focused on US policy makers.

“The single most important factor affecting stock markets is what the Fed is doing,” John Manley, who helps oversee about US$233 billion as chief equity strategist for Wells Fargo Funds Management in New York, told Bloomberg.

Meanwhile, oil slid to the lowest level in four months amid fresh concern about a global glut.

In Europe, the Stoxx 600 Index finished the session with a 1.3 percent gain from the previous close. The UK’s FTSE 100 Index climbed 1 percent, Germany’s DAX Index rose 1.6 percent, while France’s CAC 40 Index rallied 1.7 percent.

BusinessDesk.co.nz

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