U.S. Stocks Edge Higher for Second Straight Session -- Update
January 16 2019 - 1:22PM
Dow Jones News
By David Hodari and Amrith Ramkumar
U.S. stocks climbed for the second consecutive session
Wednesday, lifted by bank stocks as investors parsed the latest
batch of corporate earnings.
The Dow Jones Industrial Average added 129 points, or 0.5%, to
24195. The S&P 500 added 0.3%. Both benchmarks closed at their
highest level in a month Tuesday and have risen more than 10% since
Christmas Eve, though they are still about 10% from last year's
records. The tech-heavy Nasdaq Composite edged up 0.2%.
Analysts say Chinese stimulus measures have improved sentiment
toward global growth, helping stocks and other risky investments
rebound following a fourth-quarter rout. Fourth-quarter earnings
results also haven't been as weak as some investors feared, calming
some jitters about a sharp economic slowdown.
Goldman Sachs shares rose 8.2% after the bank topped earnings
targets, boosted by its mergers and acquisitions business.
Bank of America climbed 7.5% following its profit beat, the
latest example of large lenders benefiting from the Federal
Reserve's interest-rate increases.
Fourth-quarter earnings for S&P 500 companies are projected
to increase 11% from a year earlier, according to FactSet, well
below the levels in the first three quarters of 2018 but still
strong enough to support stocks following last quarter's slide,
some investors say.
"A big gap opened up where the valuations are quite appealing at
these levels," said Emily Roland, head of capital markets research
at John Hancock Investments. "Investors are starting to wade back
in here."
Entering 2019, some analysts had feared that steadily rising
rates would slow the economy and hurt profitability by increasing
borrowing costs, but recent signals of caution from the Fed have
also propelled the stock market's early-year rebound.
On Wednesday, the yield on the benchmark 10-year U.S. Treasury
note rose to 2.725%, according to Tradeweb, from 2.710% the
previous day. Yields rise as prices fall and have stabilized lately
following last quarter's slump.
BlackRock shares climbed 4.2%, also lifting financial stocks
even though the world's largest money manager suffered its largest
quarterly drop in assets under management in seven years.
In other sectors, United Continental shares surged 5.6% after
the airline operator exceeded sales and profit projections in its
latest quarter.
Ford shares slumped 5% following the auto maker's warning that
2018 profit will fall short of Wall Street expectations.
And many retailers fell after Nordstrom said full-price sales
for the holiday period were below expectations and that full-year
earnings will come in at the low end of its previous outlook.
Shares tumbled 6.8%.
Analysts were also monitoring technology and internet stocks,
which have benefited from improved appetite for risk lately and
mostly edged higher Wednesday. Netflix is slated to post earnings
Thursday, after surging Tuesday following the news that the
streaming company has raised prices for all of its subscription
plans.
Despite worries including trade tensions and the continuing
partial U.S. government shutdown, some analysts said a pickup in
earnings reports has helped investors focus on corporate results
rather than fears about global growth.
In the current earnings season, "we expect some growth, and if
the current geopolitical issues abate, we'll see the move back to
fundamentals that investors want," said Christian Nolting, chief
investment officer at Deutsche Bank Wealth Management.
Elsewhere, the Stoxx Europe 600 added 0.5%. British assets gave
a tepid reaction to the U.K. parliament's overwhelming rejection of
Prime Minister Theresa May's proposed Brexit deal late Tuesday.
In Asia, Japan's Nikkei benchmark ticked 0.5% lower after
hitting a four-week high Tuesday, while the Shanghai Composite
Index was flat. Hong Kong's Hang Seng gained 0.3%.
Write to David Hodari at David.Hodari@dowjones.com and Amrith
Ramkumar at amrith.ramkumar@wsj.com
(END) Dow Jones Newswires
January 16, 2019 13:07 ET (18:07 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.