Thursday 21st December 2017
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Wall Street moved higher after the Republican tax reform bill passed Congress and is set to deliver corporate tax cuts that will bolster profits including for FedEx.
Shares of FedEx rallied, up 3.6 percent as of 1.29pm in New York, after the company posted better-than-expected quarterly earnings and lifted its full-year earnings outlook.
FedEx also said the US tax overhaul bill could boost its 2018 earnings by an estimated US$4.40 to US$5.50 per share.
“Strategic execution by the FedEx team and a stronger global economy drove improved financial results, and we are well positioned for profitable, long-term growth,” Frederick Smith, FedEx chief executive officer, said in a statement. “We are on track for another record holiday-shipping season.”
In 1.23pm trading in New York, the Dow Jones Industrial Average rose 0.1 percent, while the Nasdaq Composite Index also added 0.1 percent. In 1.08pm trading, the Standard & Poor’s 500 Index eked out a 0.03 percent gain.
The Dow moved higher as gains in shares of Intel and those of Caterpillar, both recently up 0.9 percent, outweighed declines in shares of Walt Disney and those of General Electric, down 0.9 percent and 0.8 percent respectively.
“The tax reform passing, you’d expect the market to celebrate that,” Kevin Caron, a senior portfolio manager at Washington Crossing Advisors, told Bloomberg. “But in reality a lot of this has already been part of the drama over the last year or so in anticipation of this moment. The market has gotten what it has already been discounting in.”
Shares of General Mills rose, 0.9 percent stronger as of 12.07pm in New York, after the company reported better-than-expected quarterly sales and upgraded its full-year sales outlook, bolstered by US appetite for its cereal and snacks.
Revenue increased 2 percent to US$4.2 billion in the second quarter, while gross margins fell 2.6 percentage points to 34.4 percent, the company said in a statement.
"We do not think most investors expected a sales beat to this degree, nor did many investors anticipate a revenue guidance raise quite yet ... we expect the better sales numbers to win the day," JP Morgan analyst Ken Goldman wrote in a note, according to Reuters.
"Though fundamentals were a bit better than expected, they are not yet 'good', by our read, and much depends on a significant improvement in 2H," Goldman noted.
In the latest US economic data, A National Association of Realtors report showed existing-home sales jumped 5.6 percent to a seasonally adjusted annual rate of 5.81 million in November from an upwardly revised 5.50 million in October. Sales are at their strongest pace since December 2006.
“Faster economic growth in recent quarters, the booming stock market and continuous job gains are fuelling substantial demand for buying a home as 2017 comes to an end,” Lawrence Yun, NAR chief economist, said in the report.
“As evidenced by a subdued level of first-time buyers and increased share of cash buyers, move-up buyers with considerable down payments and those with cash made up a bulk of the sales activity last month," Yun noted. "The odds of closing on a home are much better at the upper end of the market, where inventory conditions continue to be markedly better.”
In Europe, the Stoxx 600 Index ended the day with a 0.7 percent retreat from the previous close. The UK’s FTSE 100 Index fell 0.3 percent, France’s CAC 40 Index slid 0.6 percent, while Germany’s DAX Index dropped 1.1 percent.
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