US stocks rose yesterday, buoyed by gains in shares of materials companies, including iron ore producer Cliffs Natural Resources, and a drop in weekly jobless claims.
Cliffs’ stock jumped 18.6 per cent to $21.61 after it posted earnings late on Wednesday that were much better than analysts had estimated. The S&P 500 materials index was up 1.7 per cent, leading the S&P 500 higher.
Telecommunications shares also rose following a rally in Verizon Communications. The stock rose 2.5 per cent to $53.09 after sources said it has hired advisers to prepare a possible $100bn cash-and-stock bid to take full control of Verizon Wireless from joint venture partner, Vodafone.
Investors have closely watched earnings to see if they would be enough to extend the market's advance that began at the start of the year, especially since recent economic data has suggested slowing growth in March and early April.
The majority of S&P 500 companies – 67.7 per cent so far – are beating earnings expectations, while just 41.4 per cent are surpassing revenue estimates. Though that fits with the usual pattern for earnings season, earnings surprises tend to lift stocks.
“Companies have gotten very good at controlling expectations. This has been a pattern of crunching down of estimates prior to earnings being released, and when earnings come out, they beat the number,” said Stephen Massocca at Wedbush Equity Management. “Every earnings season, the bar is somewhere where they can get over it.”
The Dow Jones industrial average was up 71.92 points, or 0.49 per cent, at 14,748.22. The Standard & Poor’s 500 Index was up 11.38 points, or 0.72 per cent, at 1,590.17. The Nasdaq Composite Index was up 27.72 points, or 0.85 per cent, at 3,297.37.
New York Report