Stronger-than-expected corporate results and upbeat economic data drove US stocks higher yesterday as they fed expectations the recovery will bolster corporate profits.
Deere & Co, the world’s largest farm equipment maker, led markets after its results beat expectations and it raised its outlook for the year ahead. Shares gained five per cent to $56.48.
The optimistic outlook on the economy was underpinned by data showing a six-month high in housing starts and a rise in industrial production in January.
“We had good housing numbers and on the general market, we’re back to business as usual: earnings,” said Alan Valdes, director of floor trading at Kabrik Trading in New York.
The results follow the upbeat trend in fourth-quarter US corporate earnings, with more than 70 per cent of the Standard & Poor’s 500 companies beating analyst estimates so far, according to Thomson Reuters data.
Healthcare stocks were among the biggest gainers as health insurance providers rebounded from recent declines. The Morgan Stanley healthcare payor index, down in six of the last seven weeks, jumped 1.9 per cent, its largest daily gain since mid-January. WellPoint rose 2.1 per cent and Aetna jumped three per cent.
The Dow Jones industrial average added 40.36 points, or 0.39 per cent, to 10,309.17.
The Standard & Poor’s 500 Index rose 4.63 points, or 0.42 per cent, to 1,099.50. The Nasdaq Composite Index gained 12.10 points, or 0.55 per cent, to 2,226.29.
United Technologies shares gained 2.2 per cent to $67.35, boosted by the output data and after the company’s chief executive said orders from China were not slowing despite that country’s efforts to curb lending. The chief executive also hinted of a possible United Tech stock buyback.
Shares of Whole Foods Market shot up 12.6 per cent to $34.35 and boosted the S&P consumer staples sector a day after the supermarket chain posted a stronger-than-expected quarterly profit and raised its full year outlook. Walgreen shares edged up 0.3 per cent to $34.19 after it said it will buy Duane Reade for $618m in cash, catapulting the largest US drugstore operator into the top spot in New York City. Among the laggards were energy shares, which gave up some of the gains that led the market to its best day in three months on Tuesday. Exxon Mobil Corp shares fell 0.8 per cent to $65.76 and an index of energy shares declined 0.35 per cent.