New Records on Wall Street

On Wall Street, the Dow Jones and S&P 500 indices reached new highs on Tuesday, thanks to better-than-expected quarterly business results from a number of companies.

The Dow Jones rose by 62 points, or 0.46 percent, to 13,712 points, while the S&P 500 index increased by 0.44 percent to 1,492 points, marking new highs for these indices since December 2007. The Nasdaq index, on the other hand, strengthened by 0.27 percent to 3,143 points.

Many companies, including Travelers, Du Pont, and Verizon Communications, reported better quarterly results than anticipated. This further encouraged investors, who were already buoyed last week by signs of strengthening in the two largest economies in the world, the U.S. and China.

With a growth of 0.9 percent, the biggest winners yesterday were stocks in the banking and mining sectors. The S&P technology sector index recorded a significantly smaller growth of 0.2 percent as exceptional results from technology companies are not expected, given the weakening consumption at the end of last year from both companies and consumers.

However, after the close of Wall Street, in extended electronic trading, the stock prices of Google and IBM jumped more than 4 percent as these tech giants impressed with their business results.

Although most companies are reporting better business results than expected, there is no euphoria in the market as the bar has been set very low, making it easy to surpass.

In a Thomson Reuters survey, analysts estimate that the earnings of companies in the S&P 500 index in the fourth quarter of last year increased by 2.6 percent compared to the same period the previous year. This is higher than the 1.6 percent growth that was expected two weeks ago, but lower than the 9.9 percent that was anticipated in a survey at the end of last year.

Of the 74 companies in the S&P 500 index that have reported financial results so far, 62 percent exceeded analysts’ expectations, which is in line with average quarterly performances in recent years.

The market was also positively influenced yesterday by the news that Congress could pass a law on Wednesday that postpones the issue of raising the debt ceiling for nearly four months. This was proposed by Republicans to allow for discussions in Congress on proposals to reduce the budget deficit in the meantime.

Trading volume was slightly below average. On Wall Street, NYSE MKT, and Nasdaq, 6.2 billion shares changed hands yesterday, while the average daily volume last year was 6.4 billion.
On European exchanges, stock prices fell yesterday. The London FTSE index weakened by 0.03 percent to 6,179 points, while the Frankfurt DAX fell by 0.68 percent to 7,696 points, and the Paris CAC decreased by 0.59 percent to 3,741 points.