U.S. Stocks Climb, Driven by Strong Earnings Reports
July 25 2017 - 10:13AM
Dow Jones News
By Riva Gold
-- Alphabet shares fall after earnings; Caterpillar gains
-- European bank stocks follow bond yields higher
-- Euro jumps, dollar weaker as Fed meeting begins
A flurry of earnings reports, higher commodity prices and a
record reading on German business sentiment gave global stocks a
boost on Tuesday.
The Dow Jones Industrial Average gained 120 points, or 0.6%, to
21633 shortly after the opening bell. The S&P 500 gained 0.3%,
and the Nasdaq Composite fell 0.2%. A fresh round of corporate
results drove moves in individual companies.
Shares of equipment giant Caterpillar gained 4.5%, among the
biggest gainers in the S&P 500, after the company raised its
revenue and profit outlook for the year.
Shares of General Motors added 0.1% even after the auto maker's
earnings plunged 58%, while shares of Google-parent Alphabet fell
2.8% after the company late Monday posted strong ad growth but said
it earned less per click.
Shares of Michael Kors Holdings fell 2.6% after the
luxury-fashion company reached a deal to buy Jimmy Choo for GBP896
million ($1.17 billion). Shares of the luxury shoemaker climbed 17%
in London.
Gains in the U.S. follow a strong session in Europe. The Stoxx
Europe 600 rose 0.6% as the German Ifo business climate index beat
analysts' expectations in July and climbed to a record high, with
the institute describing the mood among companies as
"euphoric."
Banks, insurance companies and miners drove most of Europe's
advance, as a modest rise in government bond yields supported
financial shares, since such moves tend to boost lending income.
German 10-year bond yields climbed to 0.535% from 0.497% Monday,
while 10-year Treasury yields rose to 2.283% from 2.253%. Yields
move inversely to prices.
The euro climbed 0.5% to $1.1697, around a two-year high, after
briefing reaching $1.17 earlier Tuesday. It is up over 11% against
the dollar for 2017.
"A strong economy is causing a strong euro," said Peter Elston,
chief investment officer at Seneca Investment Managers. While it
won't help exporters, many European companies are likely to benefit
from falling unemployment and stronger growth in the region, he
added.
The WSJ Dollar Index, which tracks the dollar against a basket
of 16 currencies, edged down 0.2%.
Some analysts said trading was likely to be muted as the Federal
Reserve was set to begin its two-day policy meeting later Tuesday.
Economists expect no change in interest rates at this juncture,
though some have speculated the central bank could announce the
start date of its balance sheet runoff.
"I think there's a relatively low ceiling on where [policy] can
go unless inflation kicks in," said John Maxwell, fund manager at
Ivy Investments. "We don't have signs of inflation that need to be
tamed."
In commodities, rises in Chinese iron-ore futures and
base-metals prices boosted shares of global mining companies.
Copper futures hit their highest levels since March amid optimism
about Chinese demand and possible supply challenges, and were last
up 2.6% at $6,188.50 a ton.
U.S. crude oil gained 2.2% to $47.38 a barrel, as investors
responded positively to a closely watched meeting of OPEC members
and other big crude producers.
Earlier, Australia's S&P/ASX 200 added 0.7%, outperforming
stock markets in the region, following a weak session on Monday.
Major banks and mining companies advanced, while shares there drew
some support from the climb in oil prices.
Indexes in Japan, Hong Kong and Taiwan were barely changed from
Monday's closing levels, while South Korea's Kospi fell 0.5% from a
record high, snapping an eight-day winning streak.
Nina Adam
and Ese Erheriene contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
July 25, 2017 09:58 ET (13:58 GMT)
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