US stocks soar on back of Japanese stimulus

US stocks soar on back of Japanese stimulus

Friday, October 31, 2014 5:20 pm

Nasdaq Building: a sunny Friday in the stock market

Nasdaq Building: a sunny Friday in the stock market

US stocks soared into record territory Friday following the Bank of Japan’s surprise stimulus, which spurred a wave of buying in markets around the globe.

Strong earnings from oil and technology companies, and Thursday’s buoyant report on US economic growth, underpinned the push by the key Dow and S&P 500 indices to fresh highs, and the Nasdaq Composite to its best level since March 2000.

The BoJ announced on Friday it would add up to 20 trillion yen ($182 billion) to its current asset-buying scheme, bringing it to 80 trillion yen annually, in an unexpected shift aimed at reviving growth just as the US Federal Reserve winds down its own stimulus spree.

Japan’s Nikkei 225 soared nearly five percent, while bourses in Britain, France and Germany were all solidly higher.

“Just as the Fed takes away the punch bowl, the BoJ has turned up with a crate of sake,” said Capital Spreads dealer Jonathan Sudaria.

Near 1530 GMT, the Dow Jones Industrial Average stood at 17,385.06, up 189.64 points (1.10 percent). The Dow rushed past 17,355 to a new intraday high at the open before settling back slightly, and more than 100 points above its closing record.

The S&P 500 jumped 21.38 (1.07 percent) to 2,016.03, above its all-time closing high, but slightly lower than its intraday peak.

The tech-rich Nasdaq Composite Index rose 63.95 (1.40 percent) to 4,630.09, also well past previous post-2000 highs.

– Earnings lift market –

Most components of the 30-company Dow index were higher, with both ExxonMobil (+1.7 percent) and Chevron (+1.0 percent) rising even as US oil prices sank below $80 a barrel.

Exxon reported a 2.5 percent rise in third-quarter earnings to $8.1 billion as strong refining results offset the impact of lower oil and gas production and lower oil prices. That translated into $1.89 per share, better than the $1.73 forecast by Wall Street analysts.

The story was similar at Chevron, which reported a 13 percent rise in earnings to $5.6 billion, equating to $2.95 per share, 40 cents above analyst expectations.

Market sentiment was also boosted by some strong technology results.

Online travel company Expedia rose 5.1 percent as third quarter earnings jumped 50.4 percent to $257.1 million behind a 29 percent increase in gross bookings. Online travel companies Priceline (+4.4 percent) and TripAdvisor (+3.4 percent) also rose.

GoPro, the maker of hit personal action cameras, bolted 13.5 percent higher as the newly-public company notched a 45.7 percent gain in revenues to $280 million.

The market momentum also helped boost Citigroup shares, by 0.7 percent, despite it having had to restate third-quarter earnings, cutting $600 million due to higher legal costs.

The dollar surged by one cent against the euro, to around $1.25, and to 112 yen, a level last seen at the end of 2007.

Bond prices fell. The yield on the 10-year US Treasury rose to 2.33 percent from 2.31 percent Thursday, while the 30-year advanced to 3.07 percent from 3.04 percent. Bond prices and yields move inversely.

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