While you were sleeping: Appetite for McEarnings

While you were sleeping: Appetite for McEarnings

(BusinessDesk) February 9 - Stocks on Wall Street rose, as investors welcomed more good news on corporate earnings, this time from McDonald’s Corp.

McDonald’s led gains in the Dow Jones Industrial Average after reporting its comparable-store sales climbed 5.3%, surpassing the median analyst estimate of 4.5%, according to Bloomberg data.

In early afternoon trading, the Dow Jones Industrial Average rose 0.37%, the S&P 500 Index advanced 0.26% and the Nasdaq Composite Index edged 0.15% higher.

Earnings “have been much better than expected as a result of decent sales and much higher margins,” Steven Neimeth, a money manager at SunAmerica Asset Management in Jersey City, New Jersey, told Bloomberg News. “These are early indications that the economy is gaining traction on recovery.”

The M&A deals kept coming too, with Kindred Healthcare Inc's planned acquisition of RehabCare Group Inc. Shares of both companies soared on the news.

Limiting gains was China’s third interest rate increase in four months, as the country tries to keep inflation in check. While this increase didn’t surprise investors, the timing did: the final day of China's Lunar New Year holiday. Analysts suspect it won’t be the last one.

"It is the first interest rate rise in the Year of the Rabbit, but it will not be the last," Xu Biao, an economist with China Merchants Bank in Shenzhen, referring to the country's new year, which began last week, told Reuters.

Benchmark one-year deposit rates will be lifted by 25 basis points to 3%, while one-year lending rates will also be raised by 25 basis points to 6.06%, the People's Bank of China said. The changes take effect on Wednesday.

The Stoxx Europe 600 Index shed less than 0.1% to 288.56. Four stocks rose for every three that fell.

Safe-haven currencies the U.S. dollar and Swiss franc declined, as did tensions in Egypt.

The euro rose, climbing above key resistance at US$1.3680, a high on electronic trading platform EBS last Friday. If euro/dollar manages to extend beyond US$1.3680, analysts see the next resistance level at US$1.3767, the February 2 low, according to Reuters.

"The market is happily unwinding some of the safe-haven positions taken during the Egypt crisis," Dean Popplewell, chief currency strategist at OANDA in Toronto, told Reuters.

"Egyptian headlines are not on the front pages any more and that's certainly supporting risk appetite."

In midday trading, the U.S. dollar weakened 0.4% against a basket of major currencies and also declined against the yen to 81.92 yen.

The euro rose 0.6% versus the U.S. currency to US$1.3675.

Gold jumped as traders covering short positions in the New York futures market pushed spot prices through key resistance at the metal's 100-day moving average.

Spot gold was bid at US$1,366.54 an ounce at 1641 GMT, against US$1,350.46 late in New York on Monday. U.S. gold futures for April delivery rose US$19.30 an ounce to US$1,367.50.

"Demand for gold is still strong," Simon Weeks, head of precious metals at the Bank of Nova Scotia, told Reuters. "In the short term people are expecting China to come back from their New Year holidays [with] pent-up demand for gold."

Brent crude rose 57 cents to US$99.82 a barrel 1550 GMT, while U.S. crude was steady, up 1 cent to US$87.49 a barrel.

JPMorgan Chase & Co said oil investors should consider selling existing bullish positions as prices might fall this week without fresh political tension in North Africa and the Middle East.

(BusinessDesk)

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