While you were sleeping: Wal-Mart rally boosts Wall St
By Margreet Dietz
Oct. 11 (BusinessDesk) - Wall Street rose to fresh record highs, bolstered by a rally in Wal-Mart shares after the company predicted 40 percent growth in its US online sales next year and announced a US$20 billion share buyback program.
“We have good momentum in the business, we’re executing our strategy and moving with speed to win with the customer, who is more connected than ever and embracing tools that will save them both time and money,” Walmart CEO Doug McMillon said in a statement.
“We’re combining the accessibility of our stores with e-commerce to provide new and exciting ways for customers to shop,” McMillon noted.
In 2.35pm trading in New York, the Dow rose 0.2 percent. However, the Nasdaq Composite Index slipped 0.04 percent. In 2.20pm trading, the Standard & Poor’s 500 Index added 0.1 percent.
The Dow climbed to a record 22,850.51, the S&P 500 advanced to a record 2,555.23 while the Nasdaq touched a record 6,608.30 earlier in the day.
US companies are gearing up to release their latest quarterly earnings, with Citigroup, JPMorgan Chase, Bank of America and Wells Fargo among those slated to report in the coming days.
“There’s a lot of fundamental underpinning to the rally,” Marcelle Daher, senior managing director of asset allocation at Manulife Asset Management, told Reuters. “Given where (the earnings) estimate for third-quarter is and the historic ability of companies on an aggregate to beat that number, it is a pretty low hurdle for companies to beat.”
The Dow rose as gains in shares of Wal-Mart Stores and those of Chevron, recently up 5.2 percent and 1 percent respectively, outweighed slides in shares of UnitedHealth Group and those of Procter & Gamble, recently down 1.3 percent and 1.1 percent respectively.
“It is clear that Walmart intends to continue to turn up the heat online," said Charlie O'Shea, a retail analyst with Moody’s, CNBC reported.
"We still believe Amazon's lead in online retail is insurmountable, however Walmart continues to widen the gap between itself and all other brick-and-mortar retailers by leveraging its unmatched physical resources, including stores and supply chain, and in the process is providing consumers with a compelling online alternative to Amazon," O'Shea wrote in a note to clients.
Shares in Chevron followed oil prices higher amid optimism that the world’s top producers might prolong or increase reductions in supply.
“There is a sense that we’re going to get a deal done,” Phil Flynn, senior market analyst at Price Futures Group in Chicago, told Bloomberg.
Saudi Arabia’s announcement that it’ll sell fewer barrels than ordered next month “is a sign that they are going to continue to be serious. If you are going to cut to your customers in November, it’s probably a clear sign that you expect these production cuts are going to continue,” according to Flynn.
In Europe, the Stoxx 600 Index ended the day little changed from the previous close. France’s CAC 40 Index inched 0.04 percent lower, while Germany’s DAX Index fell 0.2 percent.
The UK’s FTSE 100 Index rose 0.4 percent.