While you were sleeping: GE cuts jobs, Lululemon rallies on outlook
By Margreet Dietz
Dec. 8 (BusinessDesk) - Wall Street climbed as optimism about the outlook for corporate profits renewed appetite for tech stocks while shares of Lululemon rallied as it upgraded its full-year earnings outlook. The US dollar and oil prices also gained.
“Looking ahead into 2018, the tailwind of global earnings growth is strong, US corporate tax rates are probably going to be lower, and investors likely will still be in the mood to take on risk,” Matthew Litfin, a portfolio manager at Columbia Threadneedle Investments, told Bloomberg.
Shares of Lululemon rallied, up 6.8 percent as of 1.40pm in New York, after the Vancouver, Canada-based maker of yoga clothing and other athletic apparel reported better-than-expected quarterly earnings and upgraded its full-year earnings outlook.
"As we start the holiday season, I'm energised by our momentum and we are increasing guidance to reflect this performance," Lululemon CEO Laurent Potdevin said in a statement.
In 1.30pm trading in New York, the Dow Jones Industrial Average gained 0.4 percent, while the Nasdaq Composite Index climbed 0.6 percent. In 1.15pm trading, the Standard & Poor’s 500 Index added 0.3 percent.
“Technology once again is leading the way here,” Peter Cardillo, chief market economist at First Standard Financial in New York, told Reuters.
The Dow moved higher as advances in shares of Boeing and those of Nike, recently up 1.9 percent and 1.5 percent respectively, outweighed declines in shares of Procter & Gamble and those of Intel, recently down 1.3 percent and 1.2 percent respectively.
Shares of General Electric traded 0.9 percent higher at US$17.83 after the company said it plans to cut 12,000 jobs in its power division as part of a plan to lower costs by US$1 billion in 2018. Earlier in the day the stock rose as high as US$18.06.
“This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services,” Russell Stokes, CEO of GE Power, said in a statement. “Power will remain a work in progress in 2018. We expect market challenges to continue, but this plan will position us for 2019 and beyond.”
In the latest US jobs data, a Labour Department report showed initial claims for state unemployment benefits fell 2,000 to a seasonally adjusted 236,000 for the week ended December 2.
Job cuts as announced by GE are an exception at the moment.
“Layoffs on the part of corporations are few and far between as good help is hard to find this far along in one of the longest economic expansions in the record books," Chris Rupkey, chief economist at MUFG in New York, told Reuters.
In Europe, the Stoxx 600 Index ended the session little changed from the previous close. Germany’s DAX Index rose 0.4 percent, while France’s CAC 40 Index gained 0.2 percent.
The UK’s FTSE 100 Index shed 0.4 percent.