While you were sleeping: Solid earnings lift mood

While you were sleeping: Solid earnings lift mood

(BusinessDesk) March 25 - Equities climbed as investors recovered enough confidence to commit fresh funds amid corporate earnings reports that topped expectations.

In afternoon trading on Wall Street, the Dow Jones Industrial Average climbed 0.62%, the Standard & Poor’s 500 Index rose 0.72% and the Nasdaq Composite Index advanced 1.14%.

Among companies that surprised investors with stronger earnings than anticipated were Red Hat Inc, Micron Technology Inc and GameStop Corp. Oracle is scheduled to report earnings after the market closes.

The S&P 500 broke above its 50-day moving average at 1,305, which analysts said was a sign of optimism among investors.

"What I saw yesterday and today is a stabilisation of the market," Bruce Zaro, chief technical strategist at Delta Global Asset Management in Boston, told Reuters.

"There have been a few good earnings reports that have given investors a bit more confidence that earnings are likely to hold ... so the story will continue that the rally has been built on strong earnings momentum," he said.

The S&P 500 was forecast to end the year 11% stronger, according to a Reuters poll released today.

Meanwhile, data on the economic front painted a mixed picture of the U.S. recovery. New orders for long-lasting manufactured goods fell in February, suggesting an unexpected weakness in manufacturing activity and business investment plans.

The labour market, however, showed sustained promise as new claims for jobless benefits dropped last week and the four-week moving average fell to it lowest level in more than 2-1/2 years.

The euro strenghtened against the U.S. dollar on Thursday on optimism European policy makers would contain a political and debt crisis in Portugal.

The fall of the Portuguese government following the resignation of its prime minister is expected to dominate a summit of EU leaders on Thursday and Friday, with Lisbon under intense pressure to seek a bailout package.

European leaders were unlikely to take a decision on how to bolstered the euro zone’s bailout fund this week, delaying the process until June.

The euro recently traded 0.7% higher at US$1.4185.

Meanwhile, billionaire investor Warren Buffett told CNBC on Thursday that a collapse of the euro currency was not "unthinkable".

"Enough of a strain could cause it to fall apart," Buffet told the news channel. "I know some people think it is unthinkable, I don't think it is unthinkable."

Ratings agency Moody's warned on Thursday that Britain's triple-A sovereign debt rating could be at risk if slower economic growth made it harder for the government to reduce its budget deficit. The comments come a day after U.K. finance minister George Osborne announced downgraded growth forecasts.

"The government's ongoing commitment to large-scale deficit reduction is very important to the Aaa rating and stable outlook," Moody's said.

Brent crude oil prices rose on persistent concern about the escalating turmoil in the Middle East and fighting in Libya.

In London, May Brent rose 20 cents to US$115.75 a barrel, by noon EDT.

U.S. crude oil futures were up 30 cents to US$106.05 a barrel.

Gold hit a record high of US$1,447.40 an ounce.

(BusinessDesk)

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