Closing Update: Stocks End Higher as Fed Comments Suggest U.S. Economy Continues to Mend

By Staff,

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Stocks closed with broad-based gains today after the Federal Reserve voted to keep interest rates unchanged and forecast further declines in unemployment by the end of the year. All 10 industry sectors in the S&P 500 ended higher, including a 2.5% rise among technology stocks following another blow-out quarter for Apple. Energy stocks rallied this afternoon after some of the Fed post-meeting comments indicated continued signs of economic growth.

The Federal Open Markets Committee finished its latest 2-day meeting this morning, and as expected, made no changes in monetary policy. Financial stocks briefly turned south after the Fed statement warned of "strains in the global financial markets" but soon rebounded as the rest of today's market maintained advances. New projections released by the Fed showed some of the more dovish officials no longer want to put off a rate increase until 2016, which some market participants took as a sign that the U.S. economy continues to mend.

The projections showed seven officials now believe it would be appropriate to raise borrowing costs some time in 2014, up from five in January, while only four wanted to wait longer. In January, six wanted to wait until after 2014, including two who wanted to hold off until 2016.

Still, Fed Chairman Ben Bernanke said during a news conference today the central bank "would not hesitate" to launch another round of bond purchases to drive borrowing costs lower if it looked like the economy needed it.

Stocks leapt out of the gate following strong earnings by Apple ( AAPL ) and Boeing ( BA ), pushing aside weak data on durable goods during March. Orders for items intended to last more than three years posted their biggest decline in three years, falling 4.2% in March to a seasonally adjusted $202.57 billion, the Commerce Department reported today. February orders were revised downward to 1.9% from an originally reported 2.4% rise. The decline in March orders was largely due to a 47.6% falloff in commercial aircraft orders although the report also saw dips for machinery, computers and primary metals.

In company news, quarterly profit at Apple Inc ( AAPL ) almost doubled after a jump in iPhone sales. The stock, which dominates U.S. markets because of its size, had sold off recently, partly on fears earnings could disappoint. AAPL shares are up more than 9% today, climbing past $600 a share again, propelling the Nasdaq Composite Index to nearly a 2% advance.

Boeing Co. ( BA ) is up nearly 4%, the most in almost five months, after posting Q1 earnings that beat analysts' estimates and raising its FY12 forecast. Net income rose 58% to $923 million, or $1.22 a share, buoyed by increased deliveries of commercial jets. Analysts had been expecting a $0.93-a-share gain, according to Bloomberg News. Sales rose 30% to $19.4 billion, beating the average estimate of $18.3 billion among analysts. The manufacturer also boosted its full-year profit forecast by $0.10 a share to a new range of $4.15 to $4.35 a share after reducing a litigation-related reserve.

But shares of Catepillar ( CAT ) are down about 4% despite a 29% rise in Q1 profits to $2.37 a share after its $15.98 billion in sales, excluding recent acquisitions and its finance arm, missed Wall Street forecasts. Analysts polled by Thomson Reuters had predicted a per-share profit of $2.13 on revenue of $16.22 billion. The heavy-equipment manufacturer also increased its FY12 profit forecast, but left its revenue projection unchanged from its January statements.

The earnings season so far has been stronger than expected with more than three-quarters of the 153 companies in the S&P 500 companies so far reporting results beating analyst estimates, according to Thomson Reuters Proprietary Research as of Tuesday.

Commodities ended mixed. Crude oil for June delivery settled up 57 cents to $104.12 a barrel. June gold Jun gold fell $1.60 to finish at $1641.90 an ounce whle May silver fell 34 cents to finish at $30.42. May copper rose 3 cents to $3.70 while May natural gas had one of its best session in several weeks, rising nearly 11 cents to settle at $2.082 per 1 million BTU.

Here's where the markets stood at the end-of-day:

Dow Jones Industrial Average up 88.48 (+0.68%) to 13,090.04

S&P 500 up 18.78 (+1.37%) to 1,390.75

NASDAQ Composite up 68.03 (+2.30%) to 3,029.63


Hang Seng Index down 0.15%

China Shanghai Composite Index up 0.75%

FTSE 100 up 0.16%


(+) CRAY, Selling $140 million of hardware assets to Intel.

(+) EW, Reports $0.53 a share Q1 profit vs. $0.48 in analyst estimates.

(+) GEOI, Agrees to $1-billion buyout by Halcon Resources Corp.


(-) LNET, Q1 net loss widens to $0.14 a share from $0.09 in year-ago quarter.

(-) HES, Won't meet 60,000-barrel-a-day target for Bakken field in North Dakota.

(-) ICON, Q1 adjusted EPS misses by $0.03; cuts FY12 EPS forecast by $0.12 a share.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright (C) 2014 All rights reserved. Unauthorized reproduction is strictly prohibited.

This article appears in: Investing Commodities
Referenced Stocks: AAPL , BA , CAT

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