A stellar Facebook quarterly report coming in after the bell on Wednesday set the stage for what has become one of the most potent two-day rallies in history with the Dow bolted up 125 Thursday and a very big 396 today. This was mostly on news of terrific Q4 reports from a number of companies but also oil getting its biggest help in a long time from speculation that the OPEC nations may cut production to help the global glut in crude. (Hey, about stopping production all together until the glut is worked off?)
Investors were also encouraged by Japan's move today to actually cut its interest rate below zero. (How does that work exactly?) And believe it or not, the naysayers also helped by interpreting weak Q4 GDP reports as a sign that the Fed may hold off on the next rate hike. I guess we'll take help anyway we can get it. So the month ended on quite a bit better terms than it began. Instead of being in correction territory, the S&P is back to a normal 5% drawdown and instead of the Dow having its worst January since the exchange opened in 1865, it closes the month with just its worst January since only 2009. How the world changes in just a week, retracing 151 years of history in so short a time. Volume was vigorous both days, nearly 9 billion on Thursday and 10 billion Friday.
Markets |
Wall Street surges at end of awful January
DJ: 16,466.30 +396.66 NAS: 4,613.26
+107.28 S&P: 1,940.24
+46.88
(Reuters) Wall
Street surged over 2 percent on Friday after the Bank of Japan unexpectedly cut
interest rates and Microsoft led a major rally in technology shares, repairing
some of the damage to the S&P 500's worst January since 2009. Slammed by collapsing oil prices that have fed doubts about the health
of the global economy, stocks have had a volatile start to the year. At one
point last week, the S&P's loss for 2016 reached 11 percent before
recovering to end the month down 5 percent.
The index rose 2.48 percent on Friday, its strongest day since
September.
"Sentiment certainly had swung to a wildly negative
scenario. In the short term, I’m not sure the sentiment backdrop we’ve seen was
warranted," said Michael Church, president of Addison Capital Management
in Philadelphia.
"What happens if there is not a recession? What happens if
China stabilizes and the Fed doesn't raise rates aggressively?"
Global equities got a
surprise boost on Friday after Japan's central bank cut a benchmark rate below
zero to stimulate its economy.
Stocks were also lifted by weak fourth-quarter U.S. gross domestic product growth
data, which bolstered arguments that the Federal Reserve might go slower
than expected on future rate hikes.
While the Fed has not ruled out a rate hike in March, many
investors believe recent global economic and financial turmoil may lead it to
wait.
The software company was the biggest influence on the S&P
500 and the Nasdaq and helped push the S&P tech sector up 3.6 percent, its
strongest session since August.
Fourth-quarter corporate reporting season is well under way,
with S&P 500 companies on average expected to post a 4.1 percent drop in
earnings, according to Thomson Reuters I/B/E/S. Excluding energy companies,
earnings are seen rising 2.1 percent.
The Dow Jones industrial
average .DJI ended 2.47 percent higher at 16,466.30
while the S&P 500 .SPX gained 46.88 points or 2.48 percent
higher to end at 1,940.24. The Nasdaq
Composite .IXIC surged 2.38 percent to 4,613.95.
For the week, the Dow gained 2.3 percent, the S&P added 1.7
percent and the Nasdaq increased 0.5 percent.
That left the Dow down 5.5 percent for the month and the Nasdaq
7.9 percent lower, its largest monthly loss since May 2010.
In Friday's trading, Amazon (AMZN.O)
slumped 7.61 percent after its quarterly profit missed expectations.
U.S. crude oil CLc1 rose 1.4 percent after trimming early gains
on a report that Iran would not participate in a possible deal between OPEC and
other producing countries to reduce output.
Advancing issues outnumbered decliners on the NYSE by 2,789 to
339. On the Nasdaq, 2,290 issues rose and 584 fell.
The S&P 500 index showed 16 new 52-week highs and seven new
lows, while the Nasdaq recorded 28 new highs and 100 new lows.
About 10.0
billion shares changed hands on U.S. exchanges, above the 8.3 billion
daily average for the past 20 trading days, according to Thomson Reuters data.
Markets |
Facebook 'likes' push Wall Street higher
DJ: 16,069.64 +125.18 NAS: 4,506.68
+38.51 S&P: 1,893.36
+10.41
REUTERS/BRENDAN
MCDERMID
Wall Street climbed on Thursday as a blockbuster
quarterly report from Facebook drove tech shares higher and a bounce in oil
prices propped up the beleaguered energy sector.
Facebook (FB.O)
surged 15.5 percent in its biggest one-day leap since 2013 after the digital
advertising behemoth smashed expectations with a 52-percent jump in
fourth-quarter revenue.
The S&P energy sector
.SPNY rallied 3.15 percent, buoyed by a rise of almost 3 percent in oil prices
due to speculation that Saudi Arabia and other OPEC countries would cut output
to boost prices.
Optimism sparked by earnings from Facebook and a handful of
other companies, as well as the bounce in oil prices, was behind most of the
day's improved sentiment, investors said.
But they also warned the gains could be short-lived and that a
steep selloff this year caused by weak oil and worries about China's economy
may not be exhausted. The S&P remains down 7 percent for 2016.
"You had marquee names with pretty good earnings,"
said Chuck Carlson, chief executive officer at Horizon Investment Services in
Hammond, Indiana. "I'd love to say we're onward and upward from here but I
don't think things work that way."
The Dow Jones transport average .DJT, which Carlson said was a
good indicator of the economy's health, fell 0.8 percent.
Others remained cautious after comments by the U.S. Federal
Reserve's Open Market Committee on Wednesday did not more strongly signal it
could scale back the pace of future interest rate hikes in the wake of recent
turmoil in global markets.
"The FOMC's statement was less dovish than anticipated and
very likely may have marked a top in the recent rebound we have seen,"
warned Mohannad Aama, Managing Director, Beam Capital Management LLC in New
York.
The Nasdaq biotech .NBI index lost 3.5 percent and was on track
for its biggest monthly fall in 16 years.
The Dow Jones industrial
average .DJI gained 0.79 percent to end at 16,069.64
points while the S&P 500 .SPX added 0.55 percent to 1,893.36. The
Nasdaq Composite .IXIC rose 0.86 percent to 4,506.68.
After the bell, Microsoft (MSFT.O)
jumped 4.5 percent after its quarterly
results beat expectations thanks to aggressive cost cutting. But Amazon (AMZN.O)
slumped 11 percent after its quarterly
report let down investors. Ahead of the report, it had risen 8.9
percent.
During the session, PayPal (PYPL.O)
surged 8.39 percent and Under
Armour (UA.N)
jumped 22.59 percent. Revenue at both companies beat estimates.
Among the losers, eBay (EBAY.O) sank
12.45 percent after it forecast
weaker-than-expected quarterly revenue and profit.
Advancing issues outnumbered decliners on the NYSE by 2,054 to
1,032. On the Nasdaq, 1,470 issues rose and 1,312 fell.
The S&P 500 index showed eight new 52-week highs and 24 new
lows, while the Nasdaq recorded 13 new highs and 166 new lows.
About 8.8
billion shares changed hands on U.S. exchanges, above the 8.6 billion
daily average for the past 20 trading days, according to Thomson Reuters data.
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