Wall Street closes higher on earnings, despite weak data; Dow up 0.27

[John Starks]

Forexpros - U.S. stock markets closed higher Thursday, despite weak economic data, as market sentiment was boosted by stronger-than-expected earnings by corporate leaders such as IBM and eBay.

During early U.S. trade, the Dow Jones Industrial Average climbed 0.27%, the S&P 500 index added 0.27% while the Nasdaq Composite index added 0.79%.

Better-than-expected earnings from corporate bellwethers such as IBM and eBay released after U.S. market closed on Wednesday helped boost appetite for riskier assets.

However, pressuring equities, U.S. existing home sales fell unexpectedly in June, underlining concerns over the health of the U.S. housing sector, industry data indicated Thursday.

In a report, the National Association of Realtors said that existing home sales fell by 5.4% to a seasonally adjusted 4.37 million units in June, defying expectations for a modest increase to 4.63 million units.

Existing home sales in May totaled 4.62 million units, upwardly revised from a previously reported 4.55 million units.

Online auction site eBay saw shares rally 9.5% after it said second quarter profit more-than-doubled, thanks to higher revenue from its PayPal online payments business and its e-commerce websites.

Shares in tech giant IBM jumped 3.4% after the company raised its full-year earnings outlook, despite reporting a 3% decline in second quarter revenue.

Shares in Finnish phone maker Nokia surged 11.85% in New York after reporting second quarter sales fell 19% from a year ago to USD9.2 billion, beating expectations for a decline to EUR8.97billion.

Sales of its flagship Lumia smartphone totaled 4 million in the March-to-June period.

Shares in mobile phone chip maker Qualcomm climbed 4.35% after reporting a 15% increase in fiscal third quarter earnings. Revenue rose 28% to USD4.63 billion.

Elsewhere, shares in Walgreens soared 12.8% after the firm said that it has reached a new agreement with Express Scripts Holding on rates and terms for a multi-year pharmacy network agreement.

Express Scripts Holdings Company shares rose 1.75% on the news, while shares in competitor CVS Caremark tumbled 4.5%.

On the downside, Wall Street investment bank Morgan Stanley saw shares drop 2.8% after reporting second quarter revenue fell to USD7 billion from USD9.2 billion in the preceding quarter. Excluding debt valuation adjustments, revenue in the latest quarter totaled USD6.6 billion.

Wall Street analysts expected the investment bank to post revenue of USD7.54 billion.

Yum! Brands shares fell 2.3% after reporting lower-than-expected second quarter, as a slowdown in demand from China weighed in results.

Meanwhile, stocks battled weak manufacturing numbers. Manufacturing activity in the Philadelphia-region in July contracted for the third consecutive month in July, adding to concerns over the pace of the U.S. economic recovery, official data showed on Thursday.

In a report, the Federal Reserve Bank of Philadelphia said that its manufacturing index improved by 3.7 points to minus 12.9 in July from June’s reading of minus 16.6.

Analysts had expected the index to improve by 8.6 points to a reading of minus 8.0 in July.

On the index, a reading above 0.0 indicates improving conditions, below indicates worsening conditions.

Across the Atlantic, the EURO STOXX 50 rose 0.68%, France’s CAC 40 added 0.77%, while Germany’s DAX 30 jumped 1.02%

Investors were looking ahead to a German vote on approving the country’s part in an aid package for Spanish banks later in the day.

Earlier Thursday, Spain saw demand weaken and borrowing costs rise sharply at an auction of two, five and seven-year government bonds, fuelling fears that the country could be locked out of international credit markets.

Following the auction the yield on the country’s 10-year bonds was at 7.02%, breaching the critical 7% threshold, widely viewed as unsustainable in the long run.

In the U.K., official data showed that retail rose less-than-expected in June, inching up 0.1%, below expectations for a 0.6% gain, as wet weather hurt demand for outdoor products.

Friday is a slow day for economic releases with traders anticipating the Canadian core CPI and a few lesser economic reports.

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