Stocks Hit Four-Week High on Earnings; Pound Jumps: Markets Wrap

All you need to know about global markets this morning.

16 Oct 2019, 09:37 PM IST

Stocks Hit Four-Week High on Earnings; Pound Jumps: Markets Wrap

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S. (Photographer: Michael Nagle/Bloomberg)

(Bloomberg) -- U.S. stocks touched four-week highs, led by health care and financial shares, as earnings season began in earnest. The pound strengthened as the U.K. and European Union moved closer to a Brexit deal.

The Nasdaq Composite Index jumped more than 1.2%, while the S&P 500 topped 3,000 on an intraday basis for the first time in three weeks. Treasury yields rose amid the risk-on backdrop.

“Things on the earnings front seem to have gotten off to a pretty decent start, interest rates -- although they’ve perked back up a little -- are still extremely low, and this trade deal and positive Brexit talk are good for world growth,” said Gary Bradshaw, a portfolio manager at Hodges Capital Management. “I like what we see, and the market’s obviously responding well to that.”

In earnings news:

Johnson & Johnson raised its sales and earnings forecast for the year.
UnitedHealth beat profit estimates and raised its full-year outlook.
JPMorgan’s third-quarter results beat estimates, sending its shares higher.
Goldman Sachs reported investment bank revenue and earnings per share that undershot estimates, but its equities sales and trading was a beat.
BlackRock said there was a decline in fixed income inflows from the previous quarter as clients moved some money back into equities.

The pound strengthened and gilts fell after two EU officials said negotiators in Brussels are closing in on a draft Brexit deal that could lead to a breakthrough before the end of Tuesday. Crude oil fell for a second day and gold dropped.

Japan’s equity gauge jumped as trading resumed after a long weekend during which President Donald Trump announced progress on an interim trade accord with China. Markets elsewhere in Asia were mixed. The Stoxx Europe 600 Index rose, with all 19 sectors advancing.

Investors are closely analyzing earnings, given the global backdrop of slowing growth and a host of unpredictable macro risks. The International Monetary Fund made a fifth-straight cut to its 2019 global growth forecast, citing a broad deceleration across the world’s largest economies as trade tensions undermine the expansion.

“The earnings reports that will be particularly noteworthy are those from companies that are tied directly to the economic cycle,” said Michael Geraghty, equity strategist at Cornerstone Capital Group.

Meanwhile, the Turkish lira jumped and the country’s benchmark stock index rose after Trump imposed milder penalties over its military campaign in Syria than U.S. lawmakers had demanded.

Here are some key events coming up this week:

Wednesday brings a monetary policy decision in South Korea.
U.S. retail sales are forecast to increase for a seventh straight month. Sales in the “control group” are also expected to rise. Consumer spending is carrying the weight of U.S. economic growth so the data will be monitored closely for any signs of slowing.
China releases third-quarter GDP, September industrial production and retail sales data on Friday.

Here are the main moves in market:

Stocks

The S&P 500 Index increased 1% to 2,995.68 as of 4:04 p.m. New York time, the highest in more than three weeks.

The Dow Jones Industrial Average climbed 0.9% to 27,024.80, the highest in more than three weeks.

The Nasdaq Composite Index advanced 1.2% to 8,148.71, the highest in more than three weeks.

The Stoxx Europe 600 Index gained 1.1% to 394.02, the highest in about 17 months.

Currencies

The Bloomberg Dollar Spot Index dipped 0.1% to 1,206.62.

The euro climbed 0.1% to $1.1033.

The Japanese yen depreciated 0.4% to 108.86 per dollar, hitting the weakest in more than 19 weeks with its fifth straight decline.

Bonds

The yield on two-year Treasuries climbed three basis points to 1.62%, reaching the highest in more than two weeks on its fifth straight advance.

The yield on 10-year Treasuries gained four basis points to 1.77%, hitting the highest in more than three weeks with its fifth straight advance.

Germany’s 10-year yield increased four basis points to -0.42%, the highest in almost 11 weeks.

Britain’s 10-year yield advanced six basis points to 0.694%.

Commodities

West Texas Intermediate crude dipped 1.2% to $52.93 a barrel.

Gold depreciated 0.8% to $1,481.11 an ounce, the weakest in almost two weeks on the largest fall in two weeks.

To contact the reporters on this story: Claire Ballentine in New York at cballentine@bloomberg.net;Sarah Ponczek in New York at sponczek2@bloomberg.net

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Dave Liedtka