While you were sleeping: Results bolster mood

While you were sleeping: Results bolster mood

October 21 (BusinessDesk) - Shares on Wall Street rebounded on better-than-expected results from companies including Boeing Co and Yahoo! Inc and renewed expectations of Federal Reserve measures to stimulate growth.

In early afternoon trading, the Dow Jones industrial average gained 1.43%, the Standard & Poor's 500 Index advanced 1.36% and the Nasdaq Composite Index rose 1.27%

Delta Air Lines and US Airways Group jumped after reporting solid earnings. Boeing also advanced after raising its full-year earnings projection and Yahoo! climbed after third-quarter profit beat analysts’ estimates. Wells Fargo’s results added a positive banking boost too.

It wasn’t all good news.

Bank of America Corp shares dropped to the lowest since June 2009 after analysts at Oppenheimer & Co and Stifel downgraded the bank to "perform" and "hold" respectively today, a day after a group of investors said they were pressuring the bank to compensate for losses on mortgage-secured bonds.

The bonds were sold by Countrywide Financial, which was later acquired by Bank of America, renewing some concerns about the potential for more housing-related hurdles.

The Stoxx Europe 600 Index ended the session 0.3% higher at 266.13 after seesawing for most of the day.

“Companies are for the most part beating their numbers this earnings season,” Scott Armiger, who helps manage about US$5.6 billion at Christiana Bank & Trust in Greenville, Delaware, told Bloomberg News.

“We’re back to the trend of a weaker dollar on the expectation that the Fed is going to initiate a second round of quantitative easing.”

The greenback sank, hitting a 15-year low against the yet, after a report from influential consultancy Medley Global Advisors said the Fed planned to buy US$500 billion of Treasury debt over six months to aid growth.

That’s roughly in line with what a top Fed official said yesterday in terms of the U.S. central bank setting a target of buying about US$100 billion of bonds a month to continue to bolster liquidity.

The Fed is set to release its Beige Book, a regional business survey that will likely show a weakening recovery, at 2pm New York time, two weeks before the central bank’s November policy-setting meeting.

Before the release of the Beige Book, U.S. Treasuries pared earlier losses. The U.S. benchmark 10-year note yielded 2.47% at 11.27am in New York, after climbing to 2.51% earlier in the session, according to BGCantor Market Data.

Thirty-year bond yields shed two basis points to 3.9% while two-year yields declined two basis points to 0.34%.

The U.S. currency dropped to a 15-year low under 81 yen. It last traded 0.6% down at 81.08 yen.

The euro gained 1.1% to US$1.3960, slightly below the 8-1/2-month high above US$1.41 reached last week.

The drop in the greenback supported gold a day after the precious metal suffered its biggest one-day drop since July 1.

Spot gold was bid at US$1,344.00 an ounce at 12.25pm EDT, against US$1,336.00 late in New York on Tuesday. U.S. gold futures for December delivery gained US$8.30 an ounce to US$1,344.30.

(BusinessDesk)

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