US stocks steady after European elections

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US equities edged higher on Monday as market watchers said investors had already priced in expectations that pro-austerity leaders in Europe would be defeated over the weekend.

Meanwhile, shares in the bailed-out insurer AIG lost 3 per cent to $31.84 after the US Treasury said on Sunday that it will offer 63 per cent of its stake in the company to the public at $30.50 a share. AIG will purchase $2bn worth of the latest offering which is valued at $5bn.

The S&P 500 moved fractionally higher to 1,369.58 as stocks held steady despite some fears that election results in France and Greece would add further instability to markets.

The benchmark US index is looking to recover its losses from last week when it dropped 2.4 per cent, as shares declined heavily on Friday ahead of the European elections.

The Vix Index, known as Wall Street’s “fear gauge”, fell 1.6 per cent to 18.85. Barry Knapp, chief US equity strategist at Barclays, said: “The elections were as expected and will only serve to bring attention to the broader issue of slowing economic growth, not due to austerity. The culprit is excess debt and the resultant deleveraging in the banking system.”

He added: “The current debate about growth or austerity is a red herring; the markets are not going to fund additional spending by governments that already spend at a rate of 50 per cent of gross domestic product.”

The Nasdaq Composite Index gained 0.1 per cent to 2,957.76.

Apple, the heaviest weighted stock on the Nasdaq, moved 0.8 per cent higher to $569.48 as the company’s shares look to recover from last week’s decline of 6.4 per cent.

Shares in Cognizant Technology Solutions were among the leading decliners as the outsourcing company said its full-year sales and earnings would come in below expectations.

Cognizant lost 19.2 per cent to $56.31 as it said demand had cooled for its services heading into the second-quarter.

AT&T, the largest US telecommunications group by revenues, announced on Monday that it would enter the fast-growing home automation market with a portfolio of new services, including remote energy and water controls.

The company, which is seeking to expand its services offering beyond its traditional range, will join rival Verizon, which launched its own home-monitoring business in October.

Shares in AT&T were 0.4 per cent higher to $33. Verizon shares gained 0.7 per cent to $40.53 on the day.

Yahoo, the internet search and media company, moved 1.3 per cent higher to $15.35 as it sought to dealwith calls for its recently appointed chief executive to resign. Dissident investors have urged Yahoo’s board to fire Scott Thompson for misinformation about his educational qualifications on his personal résumé.

B-class shares in Berkshire Hathaway, the holding company led by Warren Buffett, rose 1.9 per cent to $82.47 following its annual meeting where the chief executive said the size of recent acquisitions paled in comparison to those his successor would need to make. Mr Buffett, who still has not publicly named his successor, also described his diagnosis of prostate cancer as a “non-event”.

Tyson Foods, the US meat producer, was among the leading gainers after it said second-quarter earnings rose despite climbing beef prices.

The company reported first-quarter net income of $166m, or 44 cents a share, up from $156m over the same period a year ago. Shares in Tyson gained 3.3 per cent to $18.62.

The Dow Jones Industrial Average declined 0.2 per cent to 13,008.53. Earthmoving equipment maker Caterpillar lost 1.3 per cent to $97.19.

Ahead of its second-quarter earnings report on Tuesday, Walt Disney Co jumped 2.1 per cent to $43.82. The entertainment group’s latest film, The Avengers, generated over $200m in sales in its opening weekend. The US opening lifted the worldwide total for the film to $642m after only 12 days on release.

The S&P 500 financial index was leading the major sectors, rising 0.7 per cent. Bank of America was ahead of its rivals and added 2.8 per cent to $7.94, but in recent weeks the company has moved well below its highest point for the year at roughly $10.

The S&P 500 energy index was 0.2 per cent lower. Miner Alpha Natural Resources lost 1.7 per cent to $14.21.

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