While you were sleeping: Wall St gains for fifth day on solid earnings

Wall Street climbed as investors focused on upbeat corporate earnings such as from Cisco Systems. It's the fifth successive day of gains since the market fell into correction territory last week. 

At the close of trading in New York, the Dow Jones Industrial Average was up 306.88 points, or 1.2%, to 25,200.37. The Nasdaq Composite Index gained 1.6% to 7256.43 and the Standard & Poor's 500 Index advanced 1.2% to 2731.20.

"The momentum is being fuelled by the realisation that earnings season continues to be the best we've had since 2009," Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York, told Reuters. "We're going to continue to see some aftershocks in the market, but they will incrementally become less dramatic over time."

In the latest signs of accelerating inflation, however, a Labour Department report showed US wholesale prices rose in January, with the producer price index increasing 0.4%, in line with economists' expectations and following an unchanged reading in December.

"The drumbeat of higher inflation is getting louder," Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania, told Reuters. "It does appear as if higher inflation is here to stay."

Bond yields steady at four-year high
US Treasuries were steady, with the yield on the 10-year note at 2.9%, close to the highest level in four years.

"The market is figuring out that 3% is digestible on the 10-year yield," Leo Grohowski, the chief investment officer of BNY Mellon Wealth Management, told Bloomberg. "As long as the reason you're getting to the 3 percent level is driven by a better feeling about economic growth, which therefore leads to a better feeling about corporate profits. And that's what I sense taking place."

Wall Street's fear gauge-the CBOE Volatility Index or the VIX-rose 2.3% to 19.71 at mid-session. The index climbed as high as 50.30 earlier this month.

The Dow's rise was paced by gains in Cisco, up 4.7%, and Apple, up 3.4%.  

In Europe, the Stoxx 600 Index rose 0.5%. Germany's DAX Index eked out a 0.06% gain, the UK's FTSE 100 index rose 0.3% and France's CAC40 Index rallied 1.1%.

Nestlé sales disappoint
In Switzerland, Nestlé shares declined 2.1% after the consumer goods company reported its weakest sales growth in decades and a drop in profit last year. Organic sales rose 2.4% in 2017, Nestlé said in a statement, gaining 1.9% in the fourth quarter.

"Our 2017 organic sales growth was within the guided range but below our expectations, in particular due to weak sales development towards the end of the year," Mark Schneider, Nestlé CEO, said in a statement. "Sales growth in Europe and Asia was encouraging while North America and Brazil continued to see a challenging environment."

The company predicted organic sales growth of 2-4% in 2018, while it forecast underlying trading operating margin improvement in line with its 2020 target.

Having hoped for "optimistic guidance," Bernstein analyst Andrew Wood said he was left disappointed, Bloomberg reported. Nestlé plans "active portfolio management," Schneider said. The company did not plan to increase its stake in L'Oreal, it said.

(BusinessDesk)