Thu July 18, 2019 / 4:57
pm
Wall Street rises as Fed's Williams cements rate-cut
expectations
Evan Sully -- Reuters
DJ: 27,222.97 +3.12 NAS: 8,207.24 +22.04 S&P: 2,995.11
+10.69 7/18
NEW YORK (Reuters) -
U.S. stocks moved higher on Thursday after a slow start as comments from New
York Fed President John Williams helped cement expectations for an interest
rate cut from the U.S. central bank at the end of the month.
Williams said that when rates and inflation are low,
policymakers cannot afford to keep their “powder dry” and wait for potential
economic problems to materialize. “He’s
toeing the party line at the Fed, basically implying that an insurance rate cut is the right thing to
do for the economy at this point in time,” said Chris Zaccarelli, chief
investment officer at Independent Advisor Alliance in Charlotte, North
Carolina.
Before Williams’ comments, stocks had been lower as shares
of Netflix Inc (NFLX.O) tumbled 10.3% after the company’s quarterly results, which missed targets
for new subscribers overseas. Losses in
Netflix triggered a 0.9%
fall in the communication services sector .SPLRCL, which has been one of
the best-performing S&P sectors so far this year. “I think there was this assumption that no matter what
happened globally that people would sit at home and watch television and tune
in to Netflix,” said Jack Ablin, founding partner and chief investment
officer at Cresset Asset Management in Chicago. “I think that investors have
viewed these large-cap growth technology companies as somewhat defensive.”
The Dow Jones
Industrial Average .DJI rose 3.12
points, or 0.01%, to 27,222.97, the S&P 500 .SPX gained 10.69
points, or 0.36%, to 2,995.11 and the Nasdaq Composite .IXIC added 22.04
points, or 0.27%, to 8,207.24.
Among positive
earnings reports, shares of Philip Morris International Inc (PM.N) climbed 8.2% after the tobacco company raised its
full-year profit outlook. Railroad operator Union Pacific Corp (UNP.N) jumped 5.9% after the company’s profit came in
ahead of expectations. International
Business Machines Corp (IBM.N) rose 4.6% as the company’s quarterly profit beat on strong growth in
its high-margin cloud business. Morgan Stanley (MS.N) shares rose 1.5% after the bank posted a
better-than-expected quarterly profit. The S&P 500 banks index .SPXBK was up 0.9% after three
days of losses.
“I suppose the good news is expectations were pretty low coming into this
season’s earnings,” Ablin said. “Analysts had expected a negative decline in
profit year over year and so
right now it looks like the earnings results themselves are better than
expected.”
UnitedHealth Group Inc (UNH.N) shares slipped 2.3% as the insurer
said on its conference call that 2019 revenue would not hit its original
target. Profits for S&P 500 companies are expected to rise 0.6%
for the second quarter of 2019, according to Refinitiv IBES data. Until
Wednesday, there were expectations of a dip in earnings.
Advancing issues outnumbered declining ones on the NYSE by a
1.22-to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favored advancers. The S&P 500 posted 36 new 52-week highs
and four new lows; the Nasdaq Composite recorded 61 new highs and 101 new lows.
Volume on U.S.
exchanges was 6.68 billion shares, compared
with the 6.67 billion average for the full session over the last 20 trading
days.
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