Dusseldorf Bubbling corporate profits drove Wall Street prices on Thursday. The Nasdaq and S&P 500 closed higher than ever before. Investors relied on strong quarterly results from Amazon and Apple in advance, which were due to be published after the US market closed. Things also continued to improve at Tesla.
The Dow Jones standard value index closed 0.7 percent higher at 35,730 points. The broad S&P 500 rose one percent to 4596 positions, the technology-heavy Nasdaq closed with a premium of 1.4 percent at 15,448 points.
He is still optimistic about the outlook for US equities, said portfolio manager James Gaul of wealth manager Knights of Columbus. Thanks to strong company balance sheets, nothing will change in that regard for the time being. Supply chain issues only weighed on results for a short time and would soon go away. “All major industries are attractive in the long term.”
On the economic side, investors seem to see more light than shadow. The US economy lost significant momentum in the summer months due to the increasing number of corona cases. However, the situation on the US labor market has continued to improve.
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The gross domestic product (GDP) rose in the third quarter compared to the previous quarter, extrapolated to the year only by 2.0 percent. In the second quarter, the world’s largest economy had grown at an annualized rate of 6.7 percent. Economists had expected the American economy to cool down in the summer quarter – but they had forecast annualized growth of 2.6. The figures for private consumption were also positive: it shows an annualized increase of 1.6 percent compared to the previous quarter, the consensus estimate was only 0.9 percent.
“While there are some concerns about growth,” said Oanda brokerage analyst Edward Moya. The cooling of the economy is only a consequence of the rapid spread of the particularly contagious delta variant of the corona virus. However, the pandemic is playing an increasingly minor role. “There are bets on a strong economic recovery in the fourth quarter.”
Nervousness among bond investors
However, just under a week before the US Federal Reserve’s deliberations, the nervousness among bond investors grew. They speculated on a premature tightening of monetary policy and sold mainly bonds with shorter maturities. This pushed the yield gap (spread) to its lowest level since August. At the same time, the 20-year Treasuries yielded up to 1.983 percent for the first time, higher than their 30-year counterparts. Helaba analyst Ralf Umlauf expects the US Federal Reserve to act cautiously in this mixed situation with contradicting signals. He assumes that the members will curb bond purchases, but will not decide to raise interest rates yet.
The renewed decline in initial US jobless claims fits into this picture. In the past week, they fell by 10,000 to 281,000 compared to the week, according to the Ministry of Labor. It is now the fourth decline in a row. The most recent decline was a little stronger than expected. Since the beginning of the year, the number of applications for the lifting of corona restrictions has fallen sharply. This is fueling speculation about strong employment figures in the coming week, said investment strategist Stan Shipley of the investment bank Evercore ISI. So far, experts are predicting the creation of 385,000 jobs outside of US agriculture in October, almost twice as many as in the previous month.
Look at the individual values
Apple and Amazon: Apple and Amazon received advance praise for their quarterly report, as increases of 2.5 and 1.6 percent respectively showed. The Apple price approached the seven-week-old record high. It is eagerly awaited to see whether the iPhone manufacturer can continue to get through the global chip bottlenecks well after a strong previous quarter. The Apple supply chain is traditionally well organized.
Caterpillar: Thanks to a construction boom in North America, Caterpillar increased sales and profits sharply. The construction machine manufacturer’s results were only above expectations because of special income outside of the core business and a lower tax rate, commented analyst Stephen Volkmann from the Jefferies investment bank. Caterpillar stocks nonetheless rose 4.1 3 percent.
Merck & Co.: Merck & Co rose by around 6.1 percent to $ 86.53. The pharmaceutical company raised its full-year targets after a surprisingly large jump in profits in the third quarter. The company also believes that its vaccine candidate against the coronavirus will generate sales of up to seven billion dollars by the end of 2022.
Ford: Ford stocks rose sharply, rising in two stages to a seven-year high of $ 17.57 and closing 8.7 percent higher at $ 16.86. The carmaker’s net profit collapsed by a quarter due to a lack of chips. But it is twice as high as expected by experts, said analyst David Whiston from the research house Morningstar. In addition, Ford achieved a quarterly operating profit in its South America business for the first time since 2013.
Ebay: However, there was also a well-known negative outlier with Ebay: the shares slipped 6.8 percent because of a disappointing quarterly report. Slower sales growth was forecast for the Christmas quarter. Stockbrokers saw this as a sign that reopened stores had affected the online marketplace.
Facebook: Meanwhile, Facebook shares started to recover after they had reached their lowest level in five months. When it became known that the company would be called Meta in the future, investors suddenly took the initiative. The price rose by 1.5 percent.
T. Rowe Price: The $ 4.2 billion takeover of rival Oak Hill by T. Rowe Price is well received by investors. The asset manager’s shares are heading for the largest daily gain in a year and a half with a plus of six percent. The deal will make T. Rowe an important player in alternative investments, comments analyst Daniel Fannon of the Jefferies investment bank.
Fluence: At the same time, Fluence made a strong debut on the stock market. Siemens shares rose to $ 34.84. The energy storage specialist’s papers were thus quoted almost 25 percent above their issue price.
With agency material.
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