Strong earnings take Wall Street higher on increased optimism
The S&P 500 and the Nasdaq were on track to post their first two-day gain this month on Wednesday, as Facebook led a slew of encouraging earnings reports that boosted sentiment at the end of a tumultuous October for global markets.
Shares of Facebook Inc jumped 6.2 per cent after the social media giant eased investor concerns by forecasting that margins would stop shrinking after 2019 as costs from scandals ease up.
Facebook reported a second-straight quarter of record-low user growth, confirming fears of slowing growth, but analysts said the results were not as bad as feared.
That brought some relief to the so-called FANG group of high-growth internet stocks. Amazon.com Inc rose 4.1 per cent, Netflix Inc climbed 6.8 per cent and Google-parent Alphabet Inc gained 3.9 per cent.
The S&P technology index rose 2.22 per cent, leading gains among the major S&P indexes, while the S&P communication services index jumped 2.46 per cent.
"Some continuation of yesterday's strength with pretty good results in the last hour, so this momentum is expected to continue today," said Scott Brown, chief economist at Raymond James in St. Petersburg, Florida.
"There is more comfort right now at least and less anxiety since we're finishing out the month."
The FANG group and Apple Inc have led the slide on Wall Street this month, which has left the S&P 500 and Dow Industrials with barely any gains for the year, fanned by concerns over trade, higher borrowing and wage costs, fears of corporate earnings peaking and a host of geopolitical worries.
The S&P 500 closing is set to lock near-7 per cent loss for October, its worst monthly performance in over seven years.
At 9:56 a.m. ET, the Dow Jones Industrial Average was up 276.97 points, or 1.11 per cent, at 25,151.61, the S&P 500 was up 34.55 points, or 1.29 per cent, at 2,717.18. The Nasdaq Composite was up 146.67 points, or 2.05 per cent, at 7,308.32.
The ADP national employment report showed private payrolls increased by 227,000 this month, the highest rise since February. It comes ahead of the more comprehensive non-farm payrolls report on Friday.
But data also showed U.S. labour costs accelerated in the third quarter as wages for both private and government workers surged amid tightening labour market conditions.
Strong earnings reports from companies including General Motors Co, Yum Brands Inc and Estee Lauder Cos Inc, all of which have a fair share of exposure to China, also boosted sentiment.
General Motors jumped 6.9 per cent after the carmaker's robust quarterly results and forecast.
Yum Brands was up 2.7 per cent and Yum China Holdings Inc rose 14.1 per cent as strong KFC sales drove results.
Estee Lauder gained 7.2 per cent after the cosmetics maker said strong demand in Asia boosted quarterly results and full-year profit outlook.
Defensive sectors were the only decliners, with the S&P consumer staples index falling 1.26 per cent, dragged down by losses in Kellogg CO.
Kellogg fell 8 per cent after cutting its full-year profit outlook due to higher advertising and distribution costs.
Advancing issues outnumbered decliners by a 2.54-to-1 ratio on the NYSE and by a 2.97-to-1 ratio on the Nasdaq.
The S&P index recorded six new 52-week highs and two new lows, while the Nasdaq recorded 17 new highs and 35 new lows.
(With inputs from agencies.)