Corporate Earnings Propel Recovery on Wall Street

After last week’s significant stock sell-offs in global markets, blue-chip stock prices on Wall Street rose on Monday as investor optimism regarding corporate earnings strengthened again, while concerns about credit market conditions eased.

The New York Dow Jones index increased by 0.7 percent, to 13,358 points. The S&P index gained just over one percent in value, closing trading at 1,474 points. The technology Nasdaq rose by 0.8 percent, to 2,583 points. Financial stocks, which took the hardest hit during the market correction due to worsening conditions in the credit markets, recovered on Monday, partly after the rating agency Standard & Poor’s raised the credit rating of financial giant Morgan Stanley. Generally, analysts now expect stronger growth in corporate earnings achieved in the second quarter of this year than they anticipated a week earlier. Expectations for annual growth in quarterly earnings of companies whose stocks are included in the S&P 500 index have been raised from 6.0 to 6.8 percent.

"Perhaps investors reflected on the market situation over the weekend and realized that the earnings reported so far for the second quarter of this year have been good – they mostly easily exceeded their moderate expectations," said Dough Peta, a market strategist at J&W Seligman. However, there is a noticeable lack of a flood of announcements regarding mergers and acquisitions, which has been customary every Monday for the past year. Tightened credit conditions threaten to slow down or halt the process of buying company stocks through loans, which this spring fueled the rise in stock prices on exchanges. In European markets, however, stock prices have fallen to their lowest level in the last five months, concluding five consecutive days of trading with losses as investors increasingly withdraw capital from risky assets. The London FTSE index fell by 0.15 percent, to 6,206 points. However, the Frankfurt DAX was slightly up, by 0.06 percent, to 7,456 points.  (H)