By Anora Mahmudova and Sara Sjolin, MarketWatch
Delta soars on earnings beat
Wednesday's gains on Wall Street sent key U.S. stock indexes
close to record levels, as better-than-expected earnings and a jump
in oil prices invigorated stock market bulls.
Small-cap stocks led the rally, with the Russell 2000 closing at
a fresh record.
Broadly, investors appeared to have brushed off
weaker-than-expected economic reports, while the ECB's success
rolling out its quantitative-easing program over the past month has
provided a favorable backdrop for global stocks.
Read: Draghi weathers confetti storm to make case for continued
QE
(http://www.marketwatch.com/story/draghi-let-quantitative-easing-do-its-job-2015-04-15)
The S&P 500 (SPX) closed 10.78 points, or 0.5%, higher at
2,106.62, within striking distance from the record level reached in
March. Energy stocks rallied more than 2% following a nearly 6%
jump by crude-oil futures, which settled at the highest level this
year.
The Dow Jones Industrial Average (DJI) added 75.71 points, or
0.4%, to 18,112.41, wit more than two-thirds of its 30 components
finishing with gains.
The Nasdaq Composite (RIXF) ended the session up 33.73 points,
or 0.7%, to 5,011.02.
James Abate, chief investment officer at Centre Funds, with over
$1 billion in assets under management, said companies so far are
beating or meeting lowered expectations, driving bullish
sentiment.
"The main reason equity markets are inching higher in an
environment where the economic growth is decelerating and earnings
falling, is because of monetary policy of abundant liquidity from
the ECB, Bank of Japan and even the Federal Reserve," Abate
said.
"So far in the earnings season, 35 of 37 companies on the
S&P 500 either beat or met expectations," Abate said. Most
estimates for quarterly results had been lowered heading into this
earnings period, Abate noted. "Companies have become very adept at
boosting their earnings per share by cutting cost, managing taxes
and share buybacks," he said.
Investors also dismissed weaker-than-expected manufacturing data
released ahead of the opening bell.
In economic news, the Empire State manufacturing index plunged,
falling to a negative reading, while, industrial production fell by
more than expected in March. Both reports suggested a deceleration
in economic growth. Meanwhile, a gauge of confidence among home
builders
(http://www.marketwatch.com/story/homebuilder-confidence-increases-in-april-nahb-2015-04-15)rose
in April, according to the National Association of Home
Builders/Wells Fargo housing-market index released Wednesday.
St. Louis Fed President James Bullard
(http://www.marketwatch.com/story/feds-bullard-says-rate-hikes-are-needed-for-coming-boom-2015-04-15),
speaking at the annual Hyman Minsky conference, made a case for
raising interest rates soon, arguing the level needs to be
appropriate for the coming "boom" for the U.S. economy.
Also read: Beige Book finds layoffs due to low oil prices
(http://www.marketwatch.com/story/beige-book-finds-layoffs-due-to-low-oil-prices-2015-04-15)
Wednesday's earnings:Bank of America Corp.(BAC)swung to a profit
in the first quarter
(http://www.marketwatch.com/story/bank-of-america-swings-to-quarterly-profit-2015-04-15-748540)
as it started to recover from its large legal losses in prior
years. Earnings, however, missed analyst forecasts. Shares fell
1.1%.
Delta Air Lines Inc. (DAL) posted first-quarter profits that
were better than analysts' estimates
(http://www.marketwatch.com/story/delta-shares-up-as-profit-beats-to-cut-capacity-to-combat-dollar-strength-2015-04-15).
Although the strong dollar is creating headwinds, the airline said
the strengthening buck contributes to a lower fuel bill. Shares
jumped 2.6%.
Late Tuesday, Intel Corp.(INTC) reported a 3% rise in
first-quarter earnings
(http://www.marketwatch.com/story/intel-reports-3-rise-in-earnings-2015-04-14-164851539),
in line with analyst expectations. Shares rallied 4.3%. RBC Capital
Markets lifted the company to outperform from sector perform and
raised its target price to $40 from $38.
For more on today's notable movers, read our Movers &
Shakers column ().
Other markets: Chinese stocks slumped after data showed the
country's gross domestic product rose 7% in the first quarter
(http://www.marketwatch.com/story/china-data-what-the-experts-are-saying-2015-04-15),
confirming economic expansion is slowing down.
European stocks closed higher after the European Central Bank,
as expected, left rates unchanged Wednesday
(http://www.marketwatch.com/story/ecb-leaves-rates-unchanged-draghi-to-detail-qe-progress-2015-04-15).
Crude-oil (CLK5) prices jumped nearly 6%
(http://www.marketwatch.com/storyno-meta-for-guid) to settle at
$56.39 - the highest level of this year. The gains were driven by a
smaller-than-expected increase in stockpiles as well as forecast of
higher demand from the International Energy Agency
(http://www.marketwatch.com/story/iea-sees-acceleration-in-oil-demand-growth-in-2015-2015-04-15).
In other markets, gold futures finished higher, reclaiming the
$1,200-an-ounce level and the dollar gave up earlier gains and
moved lower (http://www.marketwatch.com/storyno-meta-for-guid)
against most major currencies.
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