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TwitterIn the wake of some positive world developments, US stocks rose to almost a two week high. Between rally highs hit on January 19 and the lows of early February, the S&P 500 had fallen more than 9% and the Dow and Nasdaq lost more than 7%. After many such down sessions, worries about China curbing lending and Greece in a severe debt crisis, the market finally heaved a sigh of relief, as positive results for Barclays, U.K’s second largest bank, amongst many others, upped spirits.
Barclays’ results were boosted by investment banking and the sale of a fund-management unit. Its earnings in the second half of the year more than doubled, beating expectations and driving up interest in other bank names around the world. Barclays shares rose 7.2 per cent in London. U.S Steel Corp and Chevron Corp. also advanced 2.3 percent as the commodity prices rallied. Bank of America Corp. and Citigroup Inc. climbed. Merck & Co. rose 2.1 percent after fourth-quarter profit increased more than analysts estimated. General Growth Properties Inc., the second-largest U.S. mall owner, jumped 27 percent on a takeover offer by the Simon Property Group, the largest US public real estate company.
U.S. Stocks Surge
The Standard & Poor’s 500 Index increased 1.4 percent to 1,090.25 at 11:46 a.m. in New York, building on gains from its first weekly advance in more than a month. The Dow Jones Industrial Average climbed 125.99 points, or 1.3 percent, to 10,225.13.
With 379 companies, or 76%, of the S&P 500 having reported, fourth-quarter earnings are on track to have risen 208% from a year earlier, according to Thomson Reuters. Revenues are set to rise 8%. Stripping out the buoyant financial sector, earnings are set to rise 16% and revenues 3%. Beating the recession may finally seem likely. The Federal Reserve Bank of New York also reported that its general economic index for manufacturing in the New York region rose to 24.9 in February, up from just 15.9 in January and better than expected.
“Earnings are coming in pretty strong and that’s what moves markets in the end,” said John Carey, a Boston-based money manager at Pioneer Investment Management, which oversees more than $200 billion. “Manufacturing is increasing globally and there will be demand for raw materials, even in the U.S. we’re seeing an increase in manufacturing. People are positioning themselves to take advantage that.”
The black sheep however, was Kraft Foods, whose shares fell by almost 1.5 percent. The food maker had said the sale of its frozen pizza business to Nestle will cut 5 cents per share from earnings annually, but its recent buy of British chocolate maker Cadbury will speed up long-term growth.
Eurozone countries are giving Greece a month to show improvement in its high debt levels before demanding that the country enact deep spending cuts and tax increases. Greek bonds tumbled, ASE Index of stocks fell 1.7 percent, as european finance ministers signaled yesterday that Greece may need to step up efforts to cut its deficit rather than rely on a bailout by fellow euro-member nations.
Overseas, Hong Kong’s Hang Seng market was closed for the Lunar New Year, and Japan’s Nikkei gained 0.2%. The FTSE in London gained 1.5%, as did the DAX in Frankfurt.
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