Traders hold their breath for results
CAUTION prevailed in the US stock market yesterday, with indexes edging higher as investors kept bets to a minimum in front of earnings.
Volume was among the lightest of the year with investors wanting to see if corporate outlooks validate last week’s surge, the strongest week in a year. Dow component Alcoa reported its second-quarter results after the closing bell.
Earnings are “going to be the test to the durability of the bounce that started last week”, said Scott Marcouiller, senior equity market strategist at Wells Fargo Advisors.
The aluminium producer reported a second-quarter profit as sales rose 22 per cent. Alcoa slipped 0.6 per cent to $10.87 during the session, but jumped 3.9 per cent after the bell.
The Dow Jones industrial average added 18.24 points, or 0.18 per cent, to end at 10,216.27. The Standard & Poor’s 500 Index edged up just 0.79 of a point, or 0.07 per cent, to 1,078.75. The Nasdaq Composite Index gained 1.91 points, or 0.09 per cent, to close at 2,198.36.
Resource companies’ shares were the biggest drag overall, with the S&P materials index sliding 1.1 per cent after Chinese data over the weekend showed the country’s copper demand dropped. Freeport McMoRan Copper & Gold lost 4.2 per cent to $63.22.
US-listed shares of BP jumped 8 per cent to $36.76 with the company in talks with US oil and gas company Apache and others to sell assets worth up to $10bn.
In addition to Alcoa, other Dow components set to report earnings this week include Intel, JPMorgan Chase & Co and General Electric.
For the second quarter, analysts see earnings growth of 27 per cent for companies in the S&P 500, up from previous readings in the past three quarters, which hovered around 22 per cent. This would also exceed the 22.4 per cent analysts were predicting at the beginning of the year.
The market got some support from M&A activity after Aon said it will buy Hewitt
Associates for $4.9bn to create the world’s largest human resource services company. Hewitt surged 32.2 per cent to $46.79, while Aon sagged 7.1 per cent to $35.62.
Also on the upside, Qualcomm climbed 3.5 per cent to $35.10 after Goldman Sachs added the company to its conviction buy list.
About 6.34bn shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year’s estimated daily average of 9.65bn, and making yesterday the second-lowest volume day of the year.