Wall Street surges to five-year highs

Updated 03 February 2013
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Wall Street surges to five-year highs

NEW YORK: US stocks climbed to five-year highs in the wake of jobs and manufacturing data that showed the economy’s sluggish recovery is still on track.
The Dow industrials rose to 14,000 for the first time since mid-October 2007 and the S&P hit its highest since December that year. The S&P advanced 5 percent in January, its best start to a year since 1997.
Analysts attributed the market’s robust showing so far this year partly to a deluge of cash flowing into equities.
Data on Thursday showed investors poured $ 12.7 billion into US-based stock mutual funds and exchange-traded funds in the latest week, concluding the strongest four-week flows into stock funds since 1996.
“There’s a lot of money looking for a home and people are finally deciding the bond market is done and moving money into equities,” said Edward Simmons, managing director and partner at HighTower in Portland, Maine.
“I see the rotation (of assets) pushing the market up in the face of not-massive amounts of good news,” he said. “People are overlooking the higher risk in equities.”
Employment grew modestly in January, with 157,000 jobs added in the month, slightly below expectations for 160,000. Still, figures for both November and December were revised upwards.
Other reports showed the pace of growth in the US manufacturing sector picked up in January to its highest level in nine months, US consumer sentiment rose more than expected last month, while December construction spending also beat forecasts.
“All the data seems to keep pointing to a slowly, steadily improving economy,” said Eric Kuby, chief investment officer at North Star Investment Management Corp. in Chicago.
The Dow Jones industrial average rose 137.21 points or 0.99 percent, to 13,997.79, the S&P 500 gained 14.81 points or 0.99 percent, to 1,512.92 and the Nasdaq Composite
added 34.76 points, or 1.11 percent, to 3,176.89.
With the day’s gains, major equity indexes were on track for a fifth straight week of gains. The S&P 500 is also coming off its best monthly performance since October 2011.
Investors were also attuned to corporate earnings, with a trio of Dow components reporting profits that beat expectations.
Exxon Mobil was little changed at $ 89.95 after its results while Chevron added 0.8 percent to $ 116.10.
Drugmaker Merck & Co. fell 2.9 percent to $ 42 after a cautious 2013 outlook.
Generic drugmaker Perrigo reported a better-than-expected second-quarter profit and its shares jumped 6.3 percent to $ 106.92, the largest advancer on the S&P 500.
Of the 252 companies in the S&P 500 that have reported earnings so far, 69 percent have exceeded expectations, according to Thomson Reuters data. That is a higher proportion than over the past four quarters and above average since 1994.
Overall, S&P 500 fourth-quarter earnings are estimated to have grown 4.4 percent, according to the data, up from a 1.9 percent forecast at the start of the earnings season but well below a 9.9 percent profit growth forecast on Oct. 1.
Dell Inc. gained 4.2 percent to $13.80 after sources said the company was nearing an agreement to sell itself to a buyout consortium led by its founder Michael Dell and private equity firm Silver Lake Partners.
Shares of General Motors and Ford Motor rose after the two largest American automakers posted better-than-expected US auto sales for January.
GM gained 1.2 percent to $ 28.42 and Ford added 0.9 percent to $13.07.
Shares of Zoetis surged on its trading debut on the New York Stock Exchange after its shares were priced at $ 26, above the expected range. Zoetis was trading at $30.67 at
midday, after earlier climbing as high as $ 31.74.


Oil prices fall on expected output rise after OPEC deal

Updated 4 min 45 sec ago
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Oil prices fall on expected output rise after OPEC deal

SINGAPORE: Brent crude oil prices fell over 1.5 percent on Monday as traders factored in an expected output increase that was agreed at the headquarters of the Organization of the Petroleum Exporting Countries (OPEC) in Vienna on Friday.
Brent crude futures, the international benchmark for oil prices, were at $74.21 per barrel at 0343 GMT, down 1.8 percent from their last close.
US West Texas Intermediate (WTI) crude futures were at $68.40 a barrel, down 0.3 percent, supported more than Brent by a slight drop in US drilling activity.
Prices initially jumped after the deal was announced late last week as it was not seen boosting supply by as much as some had expected.
OPEC and non-OPEC partners including Russia have since 2017 cut output by 1.8 million barrels per day (bpd) to tighten the market and prop up prices.
Largely because of unplanned disruptions in places like Venezuela and Angola, the group’s output has been below the targeted cuts, which it now says will be reversed by supply rises especially from OPEC leader Saudi Arabia. Although analysts warn there is little space capacity for large-scale output increases.
“Several ministers suggested that (rises) would correspond to a 0.7 million bpd increase in production,” said US bank Goldman Sachs following the announcement of the agreement, although it added that were risks “that Iran production may be even lower than we assume” and that its output could fall further due to looming US sanctions.
Still, Britain’s Barclays bank said OPEC’s and Russia’s commitments would take “the market from a -0.2 million bpd deficit in H2 2018 to a 0.2 million bpd surplus.”
Energy consultancy Wood Mackenzie said the agreement “represents a compromise between responding to consumer pressure and the need for oil-producing countries to maintain oil prices and prevent harming their economies.”
In the United States, US energy companies last week cut one oil rig, the first reduction in 12 weeks, taking the total rig count to 862, Baker Hughes said on Friday.
That put the rig count on track for its smallest monthly gain since declining by two rigs in March with just three rigs added so far in June, although the overall level remains just one rig short of the March 2015 high from the previous week.