Stocks: Wednesday's review
Japanese stocks gained for a second straight day after the yen weakened and companies said the outlook for earnings has improved, boosting confidence about the global economic recovery.
Honda Motor Co. and other automakers rose after Goldman Sachs Group Inc. said the supply of parts is improving following the March 11 earthquake.
Nissan Motor Co. increased 2 percent to 784 yen.
In Japan, this week is the peak for earnings results, with more than 60 percent of the Topix index’s 1,673 companies scheduled to report.
NEC Corp. (6701), Japan’s No. 1 maker of telecom equipment, jumped 4.7 percent after forecasting a return to profit.
Orix Corp. (8591), a financial-services company, rallied 4 percent after it said it expects a 15 percent increase in net income.
Sumitomo Rubber Industries Ltd. (5110), Japan’s second-largest tiremaker, gained 4.9 percent to 940 yen after boosting its full-year net income forecast by 28 percent.
Tokyo Electric Power Co., operator of the power plant crippled by the temblor, soared 8.5 percent after saying it accepted the government’s conditions for receiving support.
European stocks climbed for a second day as better-than-estimated results from A.P. Moeller-Maersk A/S to Hermes International (RMS) SCA boosted confidence in the economic recovery.
Maersk jumped the most in eight months as the owner of the world’s largest container line said net income surged 85 percent.
Hermes gained 3.3 percent after sales increased as consumers purchased more luxury watches and fragrances. ITV Plc (ITV) slid 5.3 percent as the U.K.’s biggest commercial broadcaster forecast slowing advertising revenue growth.
Axel Springer AG (SPR) jumped 2.6 percent to 110.80 euros after Europe’s largest newspaper publisher said first-quarter profit before some items rose 6.5 percent.
Company earnings offset reports from China’s statistics bureau and central bank showing inflation in the country held above 5 percent in April and lending exceeded analysts’ estimates, signaling that further monetary tightening may be needed to cool the fastest-growing major economy. Consumer prices rose 5.3 percent from a year earlier and banks extended 740 billion yuan ($114 billion) of local-currency loans.
Another release today showed German consumer prices accelerated more than initially estimated in April after energy costs surged. Bank of England Governor Mervyn King said that inflation remains “uncomfortably high,” and officials signaled they may need to raise interest rates later this year even as the economy struggles to build momentum.
Stocks continued to slide deep into the red Wednesday, as energy and materials stocks were particularly hit hard by a sharp sell-off in oil and gasoline futures.
Shares of Chevron (CVX, Fortune 500) and Exxon Mobil (XOM, Fortune 500) were among the biggest laggards on the Dow as oil plunged nearly 6% below $100 a barrel. Gasoline futures also got hammered, tumbling 8% to $3.11 a gallon.
The selling intensified after the Energy Department's weekly inventory report showed a surprise build in gasoline supplies.
The drop in energy prices also drove down shares of energy firms Halliburton (HAL, Fortune 500) and Tesoro (TSO, Fortune 500), among others.
Companies: Shares of Dow component Walt Disney (DIS, Fortune 500) also dropped more than 5% after the company reported earnings that fell far short of forecasts.
Automaker Toyota (TM) said Tuesday that net income almost doubled and sales increased 0.2% for the fiscal year ended March 31. But the earthquake that hit Japan earlier this year cost the company about ¥100 billion.
Also, insurer AIG (AIG, Fortune 500) and the Treasury decided to move ahead with a $9 billion stock offering, despite the recent low price of the stock. Shares of AIG rose 4%.
Department store chain Macy's (M, Fortune 500) posted a profit of 30 cents a share, well ahead of the 17 cents that analysts were looking for. The company also announced it was doubling its quarterly dividend to 10 cents per share. Macy's shares jumped 8%, making it the best performer on the S&P 500.
Economy: The U.S. trade deficit widened to $48.2 billion in March, the Commerce Department said Wednesday. Economists were expecting a $47.7 billion trade deficit.