US stocks market rise after more strong earnings
US stocks have resumed their rally after a series of earnings reports came in better than expected.
Target Corp, Staples Inc and Dell Inc all reported earnings for last quarter that were above analysts’ forecasts.
Companies in the Standard & Poor’s 500 are on track to report higher profits for a ninth straight quarter.
But economic growth is weak around the world, and some economists worry that a second recession may becoming. That could pull down future results.
Target and Staples both gave profit forecasts that were above Wall Street’s expectations, but Dell cut its prediction for revenue growth this year.
The Dow Jones industrial average rose 95 points, or 0.8 per cent, to 11,501 in the first hour of trading overnight. The S&P 500 rose 14, or 1.2 per cent, to 1207. The Nasdaq composite rose 24, or 1 per cent, to 2548.
Stocks were up for the fourth day out of five. The market fell yesterday on concerns about Europe’s ability to contain its debt problems.
Computer maker Dell said yesterday its profit rose 63 per cent last quarter after businesses and government agencies bought more machines. But it also cited “a more uncertain demand environment” when it cut its forecast for annual revenue growth to a range of 1 per cent to 5 per cent. That’s down from an earlier growth forecast for 5 per cent to 9 per cent. Dell stock fell 6.4 per cent overnight.
Other companies are more optimistic. Retailer Target said it expects to earn between $US4.15 per share and $US4.30 per share this year. Analysts had expected $US4.14 per share, according to FactSet. Target also said its earnings last quarter rose 3.7 per cent on grocery sales.
Office products retailer Staples raised its profit forecast for the year after saying strong international sales pushed earnings up 36 per cent last quarter. Staples shares rose 1 per cent.
Deere also raised its forecast for full-year earnings. It now expects to earn $US2.7 billion ($2.58 billion) this fiscal year, up from a May forecast of $US2.65 billion. The maker of tractors and other heavy equipment said its profit rose 15 per cent last quarter on strong demand for farm equipment. Deere, though, fell 1.9 per cent.
Crude oil rose $2.02 per barrel to $US88.67. Energy stocks in the S&P 500 rose 1.5 per cent, the most among the 10 industries that make up the index.
Companies are making more money, but many have done so by raising prices to offset higher costs. Higher food prices helped push inflation at the wholesale level to 0.2 per cent in July, according to a government report overnight. But that is still well below inflation levels earlier this year when oil prices were spiking because of violence in the Middle East. In February, wholesale inflation was 1.4 per cent.
Stocks have been particularly volatile in August. Worries rose as the US government said it may default on its debt unless it was allowed to borrow more. The government just bt the deadline to avoid a default, but the partisanship in the debate came at a cost - Standard & Poor’s downgraded the US credit rating on August 5 by one notch to AA+ from the top AAA rating.
That triggered one of Wall Street’s wildest weeks: The Dow rose or fell by at least 400 points in each of the first four days of last week, the first time that has happened.
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