BUSINESSDESK: Optimism amid better-than-expected US corporate earnings and economic data helped propel Wall Street, with the mood underpinned by expectations the obstacles to Spain finally seeking European Union financial assistance are being cleared.
Shares of Johnson & Johnson rose, last up 1.2%, after the company posted better-than-expected third-quarter profit and upgraded its 2012 earnings forecast. Shares in State Street also were higher as its results beat expectations.
In other corporate news, Vikram Pandit unexpectedly resigned as chief executive of Citigroup, with some reports suggesting he was ousted amid a clash with the board of directors over strategy for the company and recent missteps with regulators. Its shares rose.
In afternoon trading in New York, the Dow Jones Industrial Average climbed 0.93%, the Standard & Poor's 500 rose 1.03% and the Nasdaq Composite Index gained 1.05%.
"One of the biggest things coming into this earnings reporting season was this drumbeat for how bad it was going to be," Art Hogan, managing director of Lazard Capital Markets in New York, told Reuters.
"We went through a period of time last week where we focused on how bad it was going to get, and we've got a chance to get some of that back because the worst-case scenario is not playing out."
Investors are awaiting results of Intel and IBM due later today.
Also underpinning the mood today were the latest US economic data. While not wildly optimistic, they at least offer hope that the world's largest economy keeps chugging along.
Homebuilders, for example, are feeling more confident. The National Association of Home Builders/Wells Fargo builder sentiment index rose to 41 in October this month, the highest level in a little over six years.
And a Federal Reserve report showed that output at factories, mines and utilities increased 0.4% in September, after a 1.4% drop in August. The median estimate in a Bloomberg survey of 85 economists called for production to rise 0.2%.
A Labor Department report showed that the Consumer Price Index climbed 0.6% in September, bolstered by a rise in petrol prices, though there is no need to worry about inflation in the immediate future.
"The Fed can confidently focus on propping up the economy because inflation is not a problem," Cary Leahey, an economist at Decision Economics in New York, told Reuters.
Europe's Stoxx 600 Index finished the day with a 1.3% gain from the previous close. The euro also strengthened.
Helping sentiment was a Bloomberg report saying that Germany is open to Spain seeking a precautionary credit line from Europe's rescue fund, citing two senior coalition lawmakers and signalling a reversal of Finance Minister Wolfgang Schaeuble's public position.
It is the latest sign that Germany is softening its hardline stance against the eurozone's most debt-laden nations, bolstering hopes the region will finally solve the crisis that has plagued it for nearly three years.
A report also showed that investor confidence in Europe's largest economy improved again in October.
This article is tagged with the following keywords. Find out more about MyNBR Tags
Most listened to
- Sunday Business with Andrew Patterson
- Listen to the week’s top business news on NBR Radio’s week in review
- Tim Hunter asks: Is the government planning to hand control of water to iwi?
- Matthew Hooton on Winston Peters’ plan to become prime minister
- Rodney Hide on the technological development and economic advance in transport