Stocks rallied this week to the highest level in more than two years as investors applauded the U.S. Federal Reserve Board's efforts to stimulate the U.S. economy, a better-than-expected U.S. employment report, and strong corporate profits.
U.S. economic news
Fed details more quantitative easing plans
On Wednesday, the Fed announced that it would purchase an additional $600 billion of longer-term Treasury securities by June in a second round of quantitative easing. The central bank said it would also keep reinvesting principal payments from its securities holdings. Demand for Treasuries jumped on the news and pushed the yield of the two-year and five-year notes down to record lows.
Employment rises more than expected
Employment rose more than expected in October, bolstering optimism about the economic recovery. Payrolls climbed by 151,000 jobs, and the jobless rate held at 9.6%. The report also showed gains in hours worked and earnings. Average hourly earnings increased 1.7% in October from the same month last year. The numbers brought increased optimism that improvement in the labor market will boost household spending.
Data show uneven recovery
Other economic news from October continued to point to an uneven recovery. The Institute for Supply Management reported that manufacturing and service sector activity picked up. U.S. productivity exceeded expectations and rose at a 1.9% annual rate in the third quarter. U.S. retailers posted mixed results, with luxury apparel faring well.
U.S. and global corporate news
EPS top estimates at 77% of companies
Earnings per share have topped estimates at about 77% of the companies in the Standard & Poor's 500 Stock Index reporting since October 7, according to data compiled by Bloomberg. Net income has increased 32% for the group amid 9.8% growth in sales.
BNP posts 46% profit increase
BNP Paribas reported a 46% increase in third-quarter profits amid strong growth in its consumer banking networks.
American International Group posted a $2.4 billion net loss for the third quarter because of various restructuring charges totaling $4.5 billion. Its main insurance business, however, improved from a year ago.
Toyota Motor posted a lower-than-expected increase in fiscal second-quarter profit but raised its full-year outlook as operating income gains in Asia offset continued losses in Europe and Japan. Nissan Motor and Honda Motor also raised their full-year earnings forecasts this week but warned that the yen's rapid rise against other currencies was an ongoing risk to the bottom line.
Global economic news
ECB, BOE, BOJ hold rates steady
The European Central Bank kept interest rates at a record low of 1% for the nineteenth month, and the Bank of England left its key rate at 0.5% and maintained its asset purchase program at £200 billion. The Bank of Japan kept interest rates at ultra low levels and finalized its plan to buy exchange-traded funds and real estate investment trusts in a ¥5 trillion asset program that it first announced last month.
Australia and India increase rates
Central banks in Australia and India raised rates to stem inflation pressures. China also signaled that an increase may be imminent.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment