NEW YORK, April 30 — US stocks rose today as strong earnings reports from McDonald’s and a slate of merger announcements lifted sentiment, while inflation worries were kept in check after tepid data on US income and spending.
McDonald’s jumped 4.7 per cent after the world’s biggest food chain reported a better-than-expected rise in sales at its restaurants.
The consumer discretionary index was up 0.8 per cent, which led the gains among the 11 major S&P sectors.
Shares of oil refiner Andeavor surged 15.9 per cent, the biggest gainer on the S&P 500, after rival Marathon Petroleum agreed to buy the company for more than US$23 billion. Marathon’s shares were down 4.2 per cent.
The main indexes are on track to record their first monthly gain since January as strong quarterly earnings take the lead, even as investors weigh concerns about rising interest rates and inflation.
“If the previous several weeks of earnings season are any indication, corporate results should continue to act as a buffer to any meaningful turn lower in equity markets,” noted Peter Kenney, senior market strategist at Global Markets Advisory Group, in New York.
“However, the principal threat to equity markets remains rising interest rates.”
US bond yields edged lower after data showed March personal income rose 0.3 per cent, lower than estimates of 0.4 per cent.
On the consumption side, personal spending in February was lowered to 0.3 per cent, from the previously reported 0.4 per cent.
Focus will turn to the Federal Reserve, when it meets on May 1 and 2 to discuss monetary policy. Though the central bank is not expected to raise rates, investors will be on the watch for clues about inflation and the pace of future rate hikes.
Despite strong results, warnings from some large US manufacturers about escalating costs going forward, had investors worried that profit margins may get squeezed.
Of the 267 S&P 500 firms that reported first-quarter earnings as of Friday, 79.4 per cent topped profit expectations, according to Thomson Reuters data. That lifted the estimate for earnings growth to 24.6 per cent from about 18 per cent at the start of the season.
At 10:01 a.m. ET, the Dow Jones Industrial Average was up 156.55 points, or 0.64 per cent, at 24,467.74, the S&P 500 was up 9.81 points, or 0.37 per cent, at 2,679.72 and the Nasdaq Composite was up 34.40 points, or 0.48 per cent, at 7,154.20.
Investors are also keeping an eye on developments around the US$26 billion takeover of wireless carrier Sprint by T-Mobile announced yesterday, which needs to clear five regulatory hurdles.
Sprint fell 12.8 per cent, while T-Mobile was down 5.1 per cent.
Allergan Plc reversed course to fall 1.6 per cent after its quarterly profit topped Wall Street estimates.
Technology stocks were the biggest boost, led by Apple’s 2.4 per cent rise ahead of its results tomorrow.
Advancing issues outnumbered decliners for a 1.75-to-1 ratio on the NYSE and for a 1.64-to-1 ratio on the Nasdaq.
The S&P index recorded 16 new 52-week highs and four new lows, while the Nasdaq recorded 35 new highs and nine new lows. — Reuters
Source: The Malay Mail Online