Wall Street markets ended the stock market session with increases thanks to the technology sector in anticipation of key corporate reports.
The blue-chip index Dow Jones Industrial Average posted a growth of more than 170 points (0.7%), with Microsoft and Apple shares rising by 2.9% and 2.8%, respectively.
The index S&P 500 rose by 0.7%, while the technology index Nasdaq Composite added 1.15%.
The stock exchange session on Monday is the first after six consecutive weeks of increases for Dow and Nasdaq. Last week, the US markets recorded their strongest monthly growth since October 2015, and the S&P 500 recorded its best January since 1987. This was a huge rebound in performance versus sales conditions in December, largely driven by the fact that the biggest fears about profits did not materialize, from the very patient Fed and the 100 months of consistent job growth.
Analysts have made significant downward changes in their company’s fourth-quarter earnings forecast after end-December sales.
During the day was published the data on factory orders in the US. The new orders for US-made goods unexpectedly fell in November amid sharp declines in demand for machinery and electrical equipment, government data showed on Monday. Factory goods orders fell by 0.6%, the Commerce Department said, after an unrevised 2.1% drop in October.
In the bond markets, the yields of US Treasuries have risen. The yield on 10-year bonds reached 2.724%, while on 30-year bonds reached 3.056%.
Meanwhile, the US dollar index climbed 0.27% to 95.84 points.
Corporate stocks performance
Among the biggest winners, today were technology stocks. Adobe climbed by nearly 4%, while Microsoft and Apple rose by 2% each.
The shares of Ultimate Software soared more than 19% on news the company is being taken private by an investor group led by Hellman & Friedman.
Clorox showed strong technical action, gapping above its 50-day moving average on strong earnings. Shares were up nearly 7%.
Papa John’s jumped 9% after activist hedge fund Starboard Value said it would invest 200 million USD in the pizza chain. Starboard CEO Jeffrey Smith will take over as chairman.
Corporate earnings reports
So far, over 47% of S&P 500 companies have produced their results. Of these, 68.5% are above analysts’ expectations.
According to CFRA’s investment strategist Lindsey Bell, reports this season are better than those in the last three quarters. “This quarter is more than what we usually see in an average quarter”, said she.
The earnings of the companies have risen by more than 20% in the first three quarters of 2018. For the time being, the October-December growth is 12.5% on an annual basis.
Seagate Technology reported Q2 EPS of 1.41 USD, beating the analyst estimate of 1.28 USD. The company’s revenue for the quarter came in at 2.7 billion USD versus the consensus estimate of 2.72 billion USD. In the second quarter, the company generated 288 million USD in cash flow from operations and 161 million USD in free cash flow. Year to date, Seagate Technology has generated 875 million USD in cash flow from operations and 571 million USD in free cash flow. The Board of Directors of the company declared a quarterly cash dividend of 0.63 USD per share.
Alphabet went on both spending and hiring spree in the fourth quarter. The Google parent said its expenses rose by 26% to 31 billion USD, outpacing revenue growth of 21% in three months ended on December 31. Investors have long been wary of the Alphabet’s growing costs, which cut into its profit margins, as the company moves from digital advertising to other, costlier businesses, like cloud computing and self-driving cars. Alphabet reported capital expenditures just north of 7 billion USD for the period, posting a much more expensive quarter than the 5.63 billion USD in capex that was projected. The company’s core advertising business has hit something of a plateau. Advertising revenue grew by 20% from last year’s fourth quarter to 32.6 billion USD, the same rate of growth as last quarter.