While you were sleeping: UPDATED Microsoft lifts Dow as record run continues

Wall Street continued to set fresh records as better than expected earnings from Microsoft and Morgan Stanley underpinned optimism about the outlook for corporate profits.

At the close, the Dow Jones Industrial Average added 36.02 points, or 0.2%, to 18,595.03, its longest winning streak in years.

The Nasdaq Composite Index rose 1.1% to 5089.93 and the Standard & Poor's 500 Index gained 0.4% to 2173.02.

A 5.3% jump in Microsoft shares and a 2.1% rise for Morgan Stanley spearheaded the rise of the Dow. Also advancing were Cisco and Intel, up 2.2% and 1.4% respectively.

"Only two companies are setting the tone of enterprise computing, Microsoft Azure and Amazon AWS," says Global Equities Research managing director Trip Chowdhry, referring to Amazon.com's web services unit.

"These are the only two initiators in the whole enterprise space that are going to see growth in excess of 80% year-on-year for at least two or three years."

Morgan Stanley exceeds expectations
Morgan Stanley posted a quarterly profit that exceeded estimates amid a surprise increase in revenue from fixed-income trading. It also reported a decline in compensation costs.

"There was a general overreaction to the underperformance" of the fixed-income business last year and through the first quarter, Morgan Stanley chief executive James Gorman said on a conference call, according to the Wall Street Journal.

"Yes, it's a good number this quarter. Are we shocked by it? Not really."

So far US corporate earnings have bolstered sentiment about a stock market trading at record highs.

"Much of the data coming in and earnings announcements have been better than expected," New Jersey-based Prudential Financial market strategist Quincy Krosby told Bloomberg.

"The market is looking for clarity that companies are more positive about the second half of the year. We've been in earnings recession for so many quarters we're now thinking about earnings as whether they're 'less bad."'

European markets rise
Europe's Stoxx 600 Index finished the session with an advance of 1% from the previous close, bolstered by better than expected earnings including from SAP.

The UK's FTSE 100 index increased 0.5%, France's CAC 40 index rose 1.2% while Germany's DAX index rallied 1.6%.

Shares of Volkswagen rose 6% after the company posted first-half earnings that bettered expectations.

Meanwhile, Turkey's lira sank to a record low after S&P Global Ratings downgraded the country's debt to BB with a negative outlook, down from BB+ with a stable outlook. On Monday Moody's Investors Service put Turkey on review for a downgrade.

"The market was focused on Moody's possible action but S&P was the first to downgrade," London-based Societe Generale SA emerging-markets credit strategist Regis Chatellier told Bloomberg.

"It's difficult to maintain an investment grade status in these conditions."

(BusinessDesk)

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