Stocks climbing after strong reports from Facebook, GM
Stocks climb again Wednesday morning as investors applaud strong quarterly results
Stocks are climbing again Wednesday morning as investors applaud quarterly results from companies including Facebook, General Motors and Estee Lauder.
After a rally a day earlier, the S&P 500 index is now on track for its first two-day winning streak since late September. The index is still down 6.6 per cent in October and is headed for its worst monthly loss since September 2011.
The S&P 500 index rose 36 points, or 1.4 per cent, to 2,719 as of 10 a.m. Eastern time. The Dow Jones Industrial Average gained 294 points, or 1.2 per cent, to 25,169. The Nasdaq composite jumped 154 points, or 2.2 per cent, to 7,316. The Russell 2000 index of smaller companies picked up 15 points, or 1 per cent, to 1,522.
In Canada, the S&P/TSX Composite Index was up 158.81 to 15,053.31, or 1.07 per cent. A week ago the exchange posted its worst day in more than three years.
Markets also rose in Europe and Asia.
Facebook announced a bigger third-quarter profit than analysts expected, although its sales fell short of their estimates. Its monthly user totals were also lower than expected, but users have increased compared to a year ago. The results appeared to be good enough to satisfy investors, and the stock rose 5.8 per cent to $154.72.
Investors worry that companies like Facebook will be subject to more regulation following several data privacy scandals as well as online election meddling from outside the U.S. Facebook is also facing harsh criticism that its platform is being used to inflame ethnic and religious conflict in Myanmar.
On top of all that, high-tech stocks like Facebook have stumbled this month as investors looked for safer, steadier options.
Other internet and technology companies also rallied. Apple gained 1.8 per cent to $217.08 US and Netflix jumped 7 per cent to $305.76 US. Amazon soared 3.9 per cent to $1,590 US.
Better than expected for GM
General Motors did far better than expected in the third quarter as it raised prices in North America and its China division held up well. While auto sales in the U.S. are slowing and trade tensions between the U.S. and China threaten vehicle sales there, GM's profit and revenue surpassed Wall Street forecasts.
The stock jumped 7.2 per cent to $35.96. It's fallen 12.3 per cent this year.
Bond prices dropped. The yield on the 10-year Treasury note rose to 3.14 per cent from 3.11 per cent.
Looking overseas, shares of aircraft maker Airbus climbed 4.8 per cent after it reported a rise in profits and cosmetics maker L'Oreal's stock rallied 7.1 per cent on upbeat results. The French CAC 40 surged 2.3 per cent and Germany's DAX gained 1.5 per cent. Britain's FTSE 100 added 1.6 per cent.
Japan's Nikkei 225 index jumped 2.2 per cent and Hong Kong's Hang Seng rose 1.6 per cent. The Kospi in South Korea gained 0.7 per cent.
A scary October
Stocks have plunged this month as Wall Street was frightened by numerous potential problems including rising interest rates and the U.S.-China trade dispute. Both could impair economic growth and company profits. Investors are that much more nervous because corporate profits are likely to fall off in 2019 after strong growth this year, a big portion of which stemmed from the one-time corporate tax cut.
Some of the market's favourite stocks over the past decade have taken enormous losses. Amazon's stock has fallen more than 20 per cent in October, wiping out around $200 billion US in market value. Microsoft and Google's parent company Alphabet both dropped as well, while Apple only fell about as much as the rest of the market.
Benchmark U.S. crude slipped 0.5 per cent to $65.87 US per barrel in New York. Brent crude, used to price international oils, lost 0.5 per cent to $75.55 US per barrel in London.
Energy companies have lagged the market as U.S. crude has fallen 10 per cent this month.