Stocks: Thursday's review
Japan’s Nikkei 225 Stock Average rose to the highest level since the March 11 earthquake after companies including Nippon Electric Glass Co. reported better earnings and the U.S. Federal Reserve renewed its pledge to stimulate growth in the world’s biggest economy.
Nippon Electric Glass, which makes glass for liquid-crystal displays, surged 8.6 percent. Panasonic Corp. rallied 2.4 percent after a report the electronics manufacturer plans to cut more than 10 percent of its workforce. Olympus Corp., a camera maker that gets about 20 percent of its sales in Europe, jumped 3.1 percent after the yen weakened.
Advantest Corp., the world’s biggest maker of tools used to test memory chips, jumped 5.6 percent to 1,597 yen. The company yesterday said it returned to profit in the year through March, posting net income of 3.16 billion yen. Sales jumped 87 percent.
European stocks rose for a sixth day, extending an eight-week high, as Deutsche Bank AG’s earnings beat estimates and the Federal Reserve pledged to keep rates low for an “extended period.”
Deutsche Bank surged the most in almost a year as Germany’s biggest bank reported a 17 percent increase in first-quarter profit. Suez Environnement climbed 4 percent after also posting higher earnings. SAP AG sank the most in 1 1/2 years after reporting a smaller-than-expected increase in profit.
In Germany, a report showed unemployment fell below 3 million for the first time in almost 19 years in April in adjusted terms, increasing the likelihood that household spending will boost economic growth.
In the U.K., consumer confidence slumped to its weakest level since the depth of the recession in February 2009 as the government’s budget cuts began in earnest, a report by GfK NOP Ltd. showed.
It took stocks a while to muster any kind of upward momentum, but the major equity averages managed to make modest gains, which ultimately extended their recent highs.
Even though there was a rush of headlines this morning, stocks struggled to establish a clear direction. Participants first got their hands on another big batch of quarterly reports, but those announcements became of secondary concern with the release of the advance reading on first quarter GDP. Although the economy grew from January through March at an annualized rate of 1.8%, which is greater than the 1.7% increase that had been broadly expected to follow the 3.1% spike in the fourth quarter, participants were disappointed with the latest initial jobless claims tally.
Initial claims for the week ended April 23 totaled 429,000, which is greater than the 390,000 initial claims that had been expected, on average, among economists surveyed by Briefing.com. Given that initial claims have climbed back above 400,000 and exceeded expectations in each of the past several weeks, some consternation has been developing among market participants.
The latest round of earnings reports didn't induce much trading in the overall market, but there were a few movers in the pack. Akamai Tech (AKAM 34.94, -6.04) dove sharply as participants ignored an upside earnings surprise and plans to repurchase shares to focus on the company's cautious commentary and outlook. Norfolk Southern (NSC 73.87, +5.46) moved in the other direction; its spike to a record high followed stronger-than-expected earnings.
Dow component Exxon Mobil (XOM 87.34, -0.44) moved modestly lower, despite an upside earnings surprise. Fellow blue chip Procter & Gamble (PG 64.50, +0.48) actually came short of the consensus earnings estimate, but still booked a gain. PepsiCo (PEP 69.72, +1.79), eBay (EBAY 34.00, -0.03), Colgate-Palmolive (CL 82.97, +1.91), AstraZeneca (AZN 49.90, -1.72), BristolMyersSquibb (BMY 28.29, +0.01), and Aetna (AET 41.45, +1.64) all posted better-than-expected bottom line results.
Treasuries managed to put together modest gains of their own, even though the results from an auction of 7-year Notes proved unimpressive. The auction drew a bid-to-cover of 2.63, dollar demand of $76.3 billion, and an indirect bidder participation rate of 38.7%. For comparison, the prior auction drew a bid-to-cover of 2.79, dollar demand of $80.9 billion, and an indirect bidder participation rate of 49.4%.
Precious metals continue to put on a show that has repeatedly featured new highs. Gold gained 0.9% to settle at $1530.60 per ounce after it reached a record high of almost $1539 per ounce. Silver prices pushed closer to $50 per ounce for a fresh 30-year high, but settled with a 4.2% gain at $47.90 per ounce.