While you were sleeping: US stocks lift on oil
Oct. 6 (BusinessDesk) - Wall Street rose in a broad rally with the price of oil on an unexpected drop in US stockpiles and better-than-expected data on the US services industry.
An Institute for Supply Management report showed its non-manufacturing index climbed to 57.1 in September, the highest since October 2015 and up from 51.4 in August.
“The markets are taking the economic news positively, but it is a double-edged sword in our opinion because a better economy means the Fed is going to finally start moving on rates,” Brad Lamensdorf, co-manager at Ranger Alternative Management in Connecticut, told Reuters.
Wall Street moved higher. In 2.08pm trading in New York, the Dow Jones Industrial Average climbed 0.7 percent, while the Nasdaq Composite Index also advanced 0.7 percent. In 1.54pm trading, the Standard & Poor’s 500 Index gained 0.5 percent.
Also helping US equities was the price of oil, up more than 2 percent, after a US Energy Information Administration report showed crude stockpiles fell in the week ended September 30. Inventories had been forecast to rise.
Gains in shares of Goldman Sachs and those of Caterpillar, recently up 2.3 percent and 2.2 percent respectively, led the Dow higher.
Monsanto, the US seeds company that is being bought by Germany's Bayer, posted a surprise fourth-quarter profit and said it expects earnings growth this year. Even so, it offered an outlook that fell short of expectations.
"Despite challenges to our business in fiscal year 2016, we delivered on the drivers that position Monsanto for the return to EPS growth in the year ahead," Hugh Grant, chief executive officer for Monsanto, said in a statement.
Monsanto said it remained confident it will close the deal with Bayer by the end of 2017.
“We are entering a new era in agriculture, where growers are demanding new solutions and technologies to be more profitable and more sustainable,” Grant said. “We believe that combining with Bayer secures our shared vision to provide a wide set of solutions to meet these demands and feed a growing world.”
Monsanto shares traded 0.4 percent higher at US$102.53 as of 12.58pm in New York.
In Europe, the Stoxx 600 Index finished the day with a drop of 0.6 percent, amid concern the European Central Bank is looking to lower its monetary policy support. Germany’s DAX Index fell 0.3 percent, as did France’s CAC 40 Index, while the UK’s FTSE 100 Index shed 0.6 percent.
"I am surprised at the reaction, but it's just this notion that the ECB may be discussing tapering one day that has upset the market," ING rates strategist Benjamin Schroeder told Reuters.
It wasn’t all pessimism.
Shares of Tesco rallied, closing 9.8 percent higher in London, after Britain's No. 1 supermarket reported better-than-expected sales and said it planned to double profit margins, bolstering optimism it is regaining ground against low-cost rivals.
“These results illustrate a business moving out of crisis to one showing real confidence in its recovery,” Tesco Chief Executive Officer Dave Lewis said on a conference call with reporters, according to Bloomberg.