Bank of Japan's unanticipated expansion in monetary stimulus helped benchmarks to finish at record highs on Friday. Moreover, encouraging earnings results also boosted investor's confidence. The Dow reached a record intraday level and witnessed its biggest weekly gain in around two years. The Nasdaq also touched its highest point since Mar 2000. The S&P 500 also finished at record level on Friday.
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The Dow Jones Industrial Average (DJI) rose 1.1%, or 195.10 points, to close at 17,390.52. The Standard & Poor 500 (S&P 500) gained 1.2% to close at 2,018.05. The tech-laden Nasdaq Composite Index closed at 4,630.74; rising 1.4%. The fear-gauge CBOE Volatility Index (VIX) declined 3.4% to settle at 14.03. A total of 8.3 billion shares were traded on Friday, higher than month-to-date average of 7.8 billion. Advancers outpaced declining stocks on the NYSE. For 75% stocks that advanced, 23% declined.
Markets received a boost on Friday following Bank of Japan's (BOJ) announcement that it will expand its assets purchasing program to deal with weak economic growth and low inflation. On Friday, BOJ decided to increase its bond purchasing volume to around 80 trillion yen ($727 billion) in a year. This is an increase of 30 trillion yen from its earlier program of bond purchases. The bank added that it would also boost ETF and REIT purchases to nearly three times its present volume.
The bank mentioned that recent falls in inflation rate and discouraging economic growth were the main reason for this decision. BOJ said: "on the price front, somewhat weak developments in demand following the [April 1] consumption-tax hike and a substantial decline in crude- oil prices have been exerting downward pressure recently." Speaking at a news conference, BOJ Governor Haruhiko Kuroda said: "We decided to expand the quantitative and qualitative easing to ensure the early achievement of our price target."
On earnings front, shares of Chevron Corporation ( CVX ) gained 2.4% after posting strong third quarter earnings on improved downstream results that saw refining margins climb on lower input costs. Earnings per share came in at $2.95, well above the Zacks Consensus Estimate of $2.54 and also improved from the year-ago profit of $2.57 per share. However, the company's quarterly revenue decreased 6.5% year over year to $54,679 million and underperformed the Zacks Consensus Estimate of $56,665 million amid a decline in crude oil prices.
Exxon Mobil Corporation's ( XOM ) shares rose 2.4% after reporting third quarter 2014 earnings of $1.89 per share, beating the Zacks Consensus Estimate of $1.75. The bottom line also increased from $1.79 in the year-ago quarter. The upside came from higher margins and improved operations in the Downstream and Chemical businesses.
Impressive earnings results helped the Energy Select Sector SPDR ETF (XLE) to gain 2% on Friday. The sector was the biggest gainer among the S&P 500 sectors. Key energy stocks including Halliburton Company ( HAL ), Chesapeake Energy Corporation ( CHK ), EOG Resources, Inc. ( EOG ) and Schlumberger Limited ( SLB ) rose 2.3%, 3.9%, 3.1% and 1.1%, respectively.
Additionally, shares of AbbVie Inc. ( ABBV ) increased 3.7% after announcing third quarter 2014 earnings of 89 cents per share, up 8.5% from the year-ago earnings and higher than the Zacks Consensus Estimate of 78 cents. Revenues also increased 7.8% to $5.019 billion in the third quarter of 2014, surpassing the Zacks Consensus Estimate of $4.828 billion.
However, the U.S. Department of Commerce reported that consumer spending declined 0.2% in September, compared to the consensus estimate of 0.1% rise. Moreover, the labor department reported that the labor cost index gained 0.7% in the second quarter. This was the second straight increase for the index, following an increase in the first quarter.
Separately, the University of Michigan/Thomson Reuters consumer-sentiment index increased to 86.9 in October, beating the consensus estimate of 86.2. This was the highest reading for the index since Jul 2007.
All the major benchmarks witnessed gains in the week. The Dow, S&P 500 and Nasdaq rose 3.5%, 2.7% and 3.3% respectively.
Markets were boosted by encouraging earnings results and impressive economic data over the week. However, benchmarks slipped into the red zone on Wednesday after the Federal Reserve ended its quantitative easing program.
Earnings reports from companies including Merck & Co. Inc. ( MRK ), Valeant Pharmaceuticals International, Inc. ( VRX ), Cummins Inc. ( CMI ), Visa Inc. ( V ) and MasterCard Incorporated ( MA ) came in positive. Impressive economic data, including third quarter GDP estimate and consumer confidence helped benchmarks to gain.
On Wednesday, the Federal Reserve announced it will end its bond-buying stimulus program this month after purchasing the final $15 billion worth of bonds. Meanwhile, the Fed pledged to keep federal funds rate low for a "considerable time" after the end of the monthly asset-purchasing program.
Over the month, the Dow, S&P 500 and Nasdaq gained 2%, 2.3% and 3.1%, respectively.
Impressive earnings results and upbeat economic data helped markets offset some of the losses registered in the first half of the month to end in the green in October. Encouraging economic news from the Eurozone and China which include October's positive Chinese flash HSBC /Markit manufacturing purchasing managers' index (PMI) and China's impressive factory output data lifted benchmarks in the later half of the month. Moreover, the prospect of the European Central Bank buying corporate bonds also boosted markets.
Positive earnings results from companies including Caterpillar Inc. ( CAT ), Yahoo! Inc. ( YHOO ), Apple Inc. ( AAPL ), The Goldman Sachs Group, Inc. ( GS ), JPMorgan Chase & Co. ( JPM ) and Wells Fargo & Company ( WFC ) also boosted investor sentiments.
However, concerns about global growth particularly that of the Eurozone's and concerns over outbreak of Ebola virus dented investor sentiment. Moreover, declining oil prices also had a negative impact on markets over the month.
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