Wall Street rises as Fed's Williams cements rate-cut expectations
NEW YORK (Reuters) – U.S. stocks moved higher on Thursday after a slow beginning as comments from New York Fed President John Williams assisted cement expectations for an interest rate cut in the U.S. central bank at the end of the month.
Williams explained that when rates and inflation are low, policymakers cannot afford to maintain their”powder dry” and await potential financial problems .
“He’s toeing the party line at the Fed, basically implying that an insurance rate reduction is the ideal thing to do to the economy at this point in time,” explained Chris Zaccarelli, chief investment officer at Independent Advisor Alliance at Charlotte, North Carolina.
Earlier Williams’ comments, stocks were reduced as shares of Netflix Inc (NFLX.O) tumbled 10.3% after the organization’s quarterly results, that missed targets for new subscribers abroad.
Losses in Netflix triggered a 0.9% fall in the communication services industry .SPLRCL, that has been one of the best-performing S&P sectors so far this year.
“I believe there was this assumption that no matter what occurred internationally that individuals would sit home and watch television and tune in to Netflix,” said Jack Ablin, founding partner and chief investment officer at Cresset Asset Management in Chicago. “I believe investors have seen these large-cap growth technology companies as somewhat defensive”
The Dow Jones Industrial Average .DJI rose 3.12 points, or 0.01%, to 27,222.97, the S&P 500 .SPX gained 10.69 things, or 0.36%, to 2,995.11 along with the Nasdaq Composite .IXIC added 22.04 things, or 0.27%, to 8,207.24.
Among positive earnings reports, shares of Philip Morris International Inc (PM.N) rose 8.2% after the tobacco company increased its full-year gain outlook. Railroad operator Union Pacific Corp (UNP.N) jumped 5.9% after the firm’s profit came in ahead of expectations.
International Business Machines Corp (IBM.N) rose 4.6% as the firm’s quarterly profit beat on strong growth in its own high-margin cloud business.
Morgan Stanley (MS.N) shares rose 1.5% after the bank posted a better-than-expected annual gain. Even the S&P 500 banks indicator .SPXBK was up 0.9% after three days of deficits.
“I suppose the great news is expectations were fairly low coming to this season’s earnings,” Ablin said. “Analysts had expected a negative drop in gain year over year and therefore right now it looks like the earnings consequences themselves are better than expected.”
UnitedHealth Group Inc (UNH.N) shares slipped 2.3% as the insurer stated in its conference call that 2019 revenue wouldn’t hit its initial goal.
Profits for S&P 500 companies are expected to rise 0.6% for the second quarter of 2019, according to Refinitiv IBES data. Until Wednesdaythere have been expectations of a dip in earnings.
Advancing issues outnumbered declining ones on the NYSE with a 1.22-to-1 ratio; on Nasdaq, a 1.23-to-1 ratio favorite advancers.
The S&P 500 published 36 new 52-week highs along with four new lows; the Nasdaq Composite listed 61 new highs along with 101 new lows.
Volume on U.S. exchanges was 6.68 billion shares, compared with all the 6.67 billion average for the full session during the last 20 trading days.
Reporting from Evan Sully; Additional reporting by April Joyner at New York and Medha Singh and Uday Sampath at Bengaluru; Testing by Sriraj Kalluvila, Anil D’Silva, Jonathan Oatis along with Dan Grebler