Wall St. rises on Microsoft’s beat, rate cut euphoria
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(Reuters) – U.S. stock indexes advanced on Friday as solid results from Microsoft lifted technology stocks and added to an upbeat mood following signs from New York Fed President John Williams that the central bank would lower interest rates this month.
Traders walk on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 16, 2019. REUTERS/Brendan McDermid
Microsoft Corp (MSFT.O), America’s most valuable company, gained 2.2% as strength in its cloud business helped it beat analysts’ estimates at the end of a week of mixed corporate results.
The S&P technology sector .SPLRCT gained 0.60%, providing the biggest boost to the benchmark S&P 500 .SPX index.
“Some optimism is being carried forward from New York Fed President John Williams’ comments and largely better-than-expected corporate earnings so far, highlighted by Microsoft,” said Art Hogan, chief market strategist at National Securities in New York.
Second-quarter profits at S&P 500 companies are now estimated to rise 1%, according to Refinitiv IBES data, in a reversal from earlier expectations of a small drop.
Williams’ remarks that the Fed cannot wait for economic disaster to unfold and must add stimulus early were behind Thursday’s positive close.
Traders raised bets for a larger, half-percentage point cut in rates at the July 30-31 policy meeting to 41%, from a 23% chance a week ago, according to CME Group’s FedWatch program.
The planemaker disclosed it would take a $4.9 billion after-tax hit due to estimated disruptions from the grounding of its 737 MAX, but shares gained 2.1% indicating that investors had feared worst.
At 9:45 a.m. ET, the Dow Jones Industrial Average .DJI was up 75.33 points, or 0.28%, at 27,298.30, and the S&P 500 .SPX was up 8.01 points, or 0.27%, at 3,003.12. The Nasdaq Composite .IXIC was up 30.50 points, or 0.37%, at 8,237.74.
The main indexes have eased off all-time highs hit at the start of this week as some of the first batches of second-quarter earnings releases pointed to a slowdown in growth under the shadow of U.S.-China trade tensions.
Kansas City Southern (KSU.N) shares rose 3.4% after the railroad operator posted a better-than-expected quarterly profit. Its shares helped the Dow transports index .DJT rise about 1%.
Credit card issuer American Express Co’s (AXP.N) beat profit estimates but shares slipped about 2.4% as expenses jumped.
Advancing issues outnumbered decliners by a 1.43-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.
The S&P index recorded 34 new 52-week highs and one new low, while the Nasdaq recorded 37 new highs and 25 new lows.
Reporting by Medha Singh and Uday Sampath in Bengaluru; editing by Patrick Graham and Sriraj Kalluvila