Rate Hike Doubts Supporting Stocks Investors weig
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Posted On: 10/16/2015 11:42:03 AM
Rate Hike Doubts Supporting Stocks
Investors weigh further signs Fed won’t raise interest rates this year
By TOMMY STUBBINGTON and RIVA GOLD
Updated Oct. 16, 2015 11:11 a.m. ET
4 COMMENTS
Global stocks remained supported Friday by expectations that the Federal Reserve may hold off from raising interest rates this year.
U.S. markets opened higher and were bouncing around unchanged in early trading. The Dow Jones Industrial Average gained 15 points, or 0.1%, to 17156. The S&P 500 edged up 0.1% and Nasdaq Composite added 0.2%.
U.S. stocks are poised to finish the week in the black, boosted by third-quarter earnings that have beaten expectations. This would be the third consecutive week of gains, the longest streak since February for the Dow Jones Industrial Average.
“Investors are starting to look past the issues that were hitting companies in the third quarter,” said Saira Malik, head of global equity portfolio management at TIAA-CREF Asset Management. “We are fairly bullish on the market going forward. If you look at the economy in general, inflation remains benign, consumer confidence remains strong, housing looks good and jobs look strong.”
Helping to boost stocks this week were surprising signs of strength in some corporate earnings reports. Heading into October, investors were expecting one of the worst quarters for corporate earnings in years. Though so far results have been choppy, many investors expect beats going forward.
Including results from 57 companies in the S&P 500, earnings are on track to slip 4.6% in the third quarter, according to FactSet. Ahead of the reporting season, analysts had expected earnings to decline 5.1%.
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“We’re going to see more positive surprises,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “Companies walk in to the analysts and say, ‘The sky is falling.’ Then of course it turns out to be not as bad.”
Friday’s pause follows a rise in stocks on Thursday after lackluster economic data further eroded expectations that the Fed would raise interest rates this year from ultralow levels. Data on Friday showed U.S. industrial production fell a seasonally adjusted 0.2% in September from a month earlier, the latest sign of a factory slowdown.
“I would be quite surprised this point if we got a rate increase this year,” said Mr. McMillan.
Markets in Asia and Europe also gained Friday.
Japan’s Nikkei Stock Average rose 1.1%, closing in on its highest level in a month. The Shanghai Composite Index edged up 1.6% and the Hang Seng Index gained 0.8% as investors also hoped for more stimulus from Beijing. China’s third-quarter growth figures are due Monday.
The Stoxx Europe 600 was up 0.5% in recent trading.
On Thursday, U.S. consumer prices fell a seasonally adjusted 0.2% in September, while manufacturing data remained weak in October. At the same time, U.S. jobless claims matched the lowest level in over 40 years.
A businessman passes before a share prices board in Tokyo on Friday. Global stocks continued to rise on further signs the Fed will hold off raising interest rates this year. ENLARGE
A businessman passes before a share prices board in Tokyo on Friday. Global stocks continued to rise on further signs the Fed will hold off raising interest rates this year. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
Meanwhile, Federal Reserve Bank of New York President William Dudley cautioned that his expectation for a rate rise this year depends on the performance of economic data, citing evidence of recent weakening.
In Europe, some upbeat third-quarter earnings have further fueled the rally, according to UniCredit equity strategist Christian Stocker.
“The earnings season is going pretty well. With the Fed now likely to not increase rates until next year, that has brightened the mood,” he said.
Shares in French retailer Carrefour climbed more than 6% Friday after it reported a rise in sales for the third quarter.
Glencore rose 2% after executives at the embattled commodities trading giant put together a plan they hope will result in a credit-rating upgrade, according to people familiar with the matter.
In currencies, the euro was steady against the dollar at $1.1365. The dollar edged higher against the yen to ¥119.08.
In commodities, gold edged down 0.3% at $1,183.40 a troy ounce after logging five consecutive days of gains.
Crude oil was 0.2% higher at $46.45 a barrel.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
Investors weigh further signs Fed won’t raise interest rates this year
By TOMMY STUBBINGTON and RIVA GOLD
Updated Oct. 16, 2015 11:11 a.m. ET
4 COMMENTS
Global stocks remained supported Friday by expectations that the Federal Reserve may hold off from raising interest rates this year.
U.S. markets opened higher and were bouncing around unchanged in early trading. The Dow Jones Industrial Average gained 15 points, or 0.1%, to 17156. The S&P 500 edged up 0.1% and Nasdaq Composite added 0.2%.
U.S. stocks are poised to finish the week in the black, boosted by third-quarter earnings that have beaten expectations. This would be the third consecutive week of gains, the longest streak since February for the Dow Jones Industrial Average.
“Investors are starting to look past the issues that were hitting companies in the third quarter,” said Saira Malik, head of global equity portfolio management at TIAA-CREF Asset Management. “We are fairly bullish on the market going forward. If you look at the economy in general, inflation remains benign, consumer confidence remains strong, housing looks good and jobs look strong.”
Helping to boost stocks this week were surprising signs of strength in some corporate earnings reports. Heading into October, investors were expecting one of the worst quarters for corporate earnings in years. Though so far results have been choppy, many investors expect beats going forward.
Including results from 57 companies in the S&P 500, earnings are on track to slip 4.6% in the third quarter, according to FactSet. Ahead of the reporting season, analysts had expected earnings to decline 5.1%.
Advertisement
“We’re going to see more positive surprises,” said Brad McMillan, chief investment officer at Commonwealth Financial Network. “Companies walk in to the analysts and say, ‘The sky is falling.’ Then of course it turns out to be not as bad.”
Friday’s pause follows a rise in stocks on Thursday after lackluster economic data further eroded expectations that the Fed would raise interest rates this year from ultralow levels. Data on Friday showed U.S. industrial production fell a seasonally adjusted 0.2% in September from a month earlier, the latest sign of a factory slowdown.
“I would be quite surprised this point if we got a rate increase this year,” said Mr. McMillan.
Markets in Asia and Europe also gained Friday.
Japan’s Nikkei Stock Average rose 1.1%, closing in on its highest level in a month. The Shanghai Composite Index edged up 1.6% and the Hang Seng Index gained 0.8% as investors also hoped for more stimulus from Beijing. China’s third-quarter growth figures are due Monday.
The Stoxx Europe 600 was up 0.5% in recent trading.
On Thursday, U.S. consumer prices fell a seasonally adjusted 0.2% in September, while manufacturing data remained weak in October. At the same time, U.S. jobless claims matched the lowest level in over 40 years.
A businessman passes before a share prices board in Tokyo on Friday. Global stocks continued to rise on further signs the Fed will hold off raising interest rates this year. ENLARGE
A businessman passes before a share prices board in Tokyo on Friday. Global stocks continued to rise on further signs the Fed will hold off raising interest rates this year. PHOTO: AGENCE FRANCE-PRESSE/GETTY IMAGES
Meanwhile, Federal Reserve Bank of New York President William Dudley cautioned that his expectation for a rate rise this year depends on the performance of economic data, citing evidence of recent weakening.
In Europe, some upbeat third-quarter earnings have further fueled the rally, according to UniCredit equity strategist Christian Stocker.
“The earnings season is going pretty well. With the Fed now likely to not increase rates until next year, that has brightened the mood,” he said.
Shares in French retailer Carrefour climbed more than 6% Friday after it reported a rise in sales for the third quarter.
Glencore rose 2% after executives at the embattled commodities trading giant put together a plan they hope will result in a credit-rating upgrade, according to people familiar with the matter.
In currencies, the euro was steady against the dollar at $1.1365. The dollar edged higher against the yen to ¥119.08.
In commodities, gold edged down 0.3% at $1,183.40 a troy ounce after logging five consecutive days of gains.
Crude oil was 0.2% higher at $46.45 a barrel.
Write to Corrie Driebusch at corrie.driebusch@wsj.com
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