US markets bounce back from steep falls in bombing aftermath
Investors buoyed by drop in cost of living and robust corporate earnings figures
Published 17/04/2013 | 05:00
US MARKETS recovered yesterday following the steep falls that occurred in the immediate aftermath of the Boston marathon bombings.
Stocks on Wall Street rose more than 1pc yesterday, bouncing back from steep falls the previous day thanks to data showing a surge in construction and robust earnings figures from big companies, such as Coca-Cola.
The Standard & Poor's 500 Index rallied by over 1pc in New York, rebounding from what had been the biggest drop in five months in the wake of the apparent terrorist attack in Boston.
The index had suffered extended losses late on Monday following the explosions near the finish line of the Boston Marathon that killed three people and left at least 128 in the hospital.
Yesterday, however, investor sentiment recovered quickly, as many took comfort in a drop in US consumer prices last month.
Cost of living
Those numbers showed the cost of living in the US declined in March for the first time in four months as cheaper gasoline and clothing kept consumer inflation in check.
Investors are betting the weaker numbers are positive because it boosts the chances of the US Federal Reserve maintaining its economic stimulus efforts. "Dovish economic data is not good in the long-run, but it is certainly supportive of more Fed action," said Art Hogan at Lazard Capital Markets in New York.
The mood was also helped by strong corporate earnings. Coca-Cola rose 5.7pc, the most in four years, after announcing profits that beat estimates. BlackRock, the world's largest asset manager also announced earnings that beat estimates.
Shares of Johnson & Johnson hit a record-high of $83.50 after the healthcare company reported strong quarterly earnings.
More than half of the companies in the S&P 500 that have reported for the current quarter saw earnings come in ahead of analyst estimates, according to Bloomberg.
In the US, shares linked to commodities, technology, financial and consumer- staples firms were all up yesterday.
The better mood was also helped by new data that showed the number of houses being built was up 7pc in March, and is running at the highest rate since June 2008. (Additional reporting: Bloomberg and Reuters)