Stocks still on winning streak
Published 22/04/2014 | 10:22
The US stock market logged its longest winning streak in six months as another big week for company earnings began.
Halliburton, an oil and gas drilling company, rose after reporting a first-quarter profit on rising revenue in the Middle East and Asia. Toy maker Hasbro gained after it said it returned to profitability in its first quarter, driven by sales of girls' toys such as My Little Pony and Nerf Rebelle. Netflix surged after the close after the company said its earnings surged as it attracted more subscribers.
Close to a third of the companies in the Standard & Poor's 500 index are scheduled to report first-quarter earnings this week, giving investors a better picture about the outlook for demand after the economy's winter slump. Stocks logged their best weekly gain since July last week as companies started reporting their earnings.
"I like what I see in the market," said Karyn Cavanaugh, a senior market strategist with ING US Investment Management. "It's all going to be about earnings, because earnings are the driver of the market in the long run."
The Standard & Poor's 500 index rose 7.04 points, or 0.4%, to 1,871.89. The index has risen five straight days, its longest streak of gains since October.
The Dow Jones industrial average climbed 40.71 points, or 0.3%, to 16,449.25. The Nasdaq composite gained 26.03 points, or 0.6%, to 4,121.55.
Halliburton rose 2.02 dollars, or 3%, to 62.92 after the company turned a profit in the first quarter following a loss in the same period a year ago. Last year the company set aside money for litigation over the 2010 Gulf of Mexico oil spill. Hasbro rose 1.05, or 1.9%, to 55.66 after its earnings came in higher than investors were expecting.
Stocks also got a lift from an encouraging economic report.
An index designed to predict future economic growth rose in March for the third month in a row, an encouraging sign after harsh winter weather slowed down the US economy. The Conference Board said that its index of leading indicators increased 0.8% in March after a 0.5% rise in February and a modest 0.2% gain in January.
Investors' focus will largely be on corporate earnings this week.
McDonald's, Delta Air Lines and Apple are among the 159 companies in the S&P 500 that are due to report earnings this week. Together, the companies represent about a third of the value of the index.
After an unusually harsh winter, Wall Street's expectations for earnings are relatively low. So far, most companies are exceeding them.
S&P 500 companies are forecast to report an overall 1.1% decline in earnings for the period, according to data from S&P Capital IQ. If that forecast holds, it would mark the first decline in corporate earnings since the third quarter of 2009, when earnings fell 1.7%. About two-thirds of the companies that have reported earnings so far have exceeded analysts' expectations.
Stocks have stabilised over the last week after a volatile start to the month, when a sell-off in high-flying technology and biotechnology stocks pushed the overall market lower. The S&P 500 climbed 2.7% last week, recovering its loss from a week earlier.
Bond prices were little changed. The yield on the 10-year Treasury note edged down to 2.71% from 2.72%.
Among other stocks making big moves:
- Newmont Mining jumped 1.42 dollars, or 6%, to 24.95 following reports that the mining company was considering a merger with Barrick Gold. The two companies are seeking to cut costs after a slump in metals prices.
- Athenahealth, a provider of online health-record services, slumped 9.99, or 7%, to 135.59 after the company reported earnings that fell short of analysts' estimates.
- Netflix rose 20.10, or 6%, to 368.30 in after-hours trading after the online video streaming company said its first-quarter earnings soared as another season of the popular political drama House Of Cards helped attract an additional 2.25 million subscribers.