Wall St rises as Fed reaffirms policies

Wall Street rose on Wednesday, and touched its highs for the session after the US Federal Reserve affirmed its supportive policies, while investors also saw containment of any fallout from the banking crisis in Cyprus.

Among shares in the spotlight, FedEx slid 6.9 per cent to $99.13 after the package delivery company cut its full-year forecast in the wake of third-quarter net income dropping 31 per cent to $361m, or $1.13 per share. Excluding items, FedEx earned $1.23 per share, while analysts had expected earnings of $1.39 per share.

The company said results were hit by customers switching to cheaper modes of shipping from air express, but that they were focused on strategic cost reductions.

“International airfreight trends remain weak,” said analysts at Baird Equity Research, who added that the company’s “multiyear profit improvement initiative remains on track, an important catalyst for the stock”.

While shares in FedEx remain higher by 8 per cent this year, the pressure on the stock on Wednesday weighed on the Dow Transportation Average after it touched a record intraday peak on Tuesday. Transports slipped 0.4 per cent, trimming their 2013 gain to slightly more than 17 per cent. So far this year, transports are handily beating the major US indices.

In New York, the S&P 500 closed up 0.7 per cent at 1,558.71, less than seven points from its all-time closing peak of 1,565.15 set in 2007.

Among the main sectors, consumer discretionary, staples and healthcare shares led gains. While the S&P loiters just below its all-time peak, defensive sectors remain standout performers this year, led by healthcare and consumer staples stocks.

Equity volatility as measured by the CBOE’s Vix index was subdued, settling at a reading of 12.7, down sharply from its recent spike to a peak of 15.4 on Tuesday.

The Dow Jones Industrial Average settled 0.4 per cent higher at 14,511.73, after touching a new intra-day record high of 14,546.82.

The price-weighted blue-chip barometer slightly lagged its rival benchmarks in part because of a 1.5 per cent fall in shares of Caterpillar, which settled at $86.94. The heavy machinery maker reported its rolling three-month sales fell 14 per cent in February, after a drop of 4 per cent in January.

The Nasdaq Composite was 0.8 per cent firmer at 3,254.19.

After the closing bell, Oracle reported fiscal third-quarter earnings that just missed estimates. The stock slumped 6.8 per cent to $33.31 in after-hours trading.

Shares in JC Penney rose 1.2 per cent in extended trading hours as the retailer said that bondholders, who last month claimed the company had breached a covenant on a bond indenture withdrew and rescinded their note of default, according to a regulatory filing.

In other earnings news, shares in Lennar rose 4.8 per cent to $43.40 after the homebuilder posted better-than-forecast earnings of 26 cents a share versus a forecast of 15 cents. Shares in Toll Brothers, the luxury homebuilder rose 5.9 per cent to $36.53.

A strong fiscal fourth-quarter and higher dividend for Williams-Sonoma boosted its shares by 10.3 per cent to $49.85. The upmarket kitchen appliance retailer earned $133.7m, or $1.34 per share, surpassing analyst forecasts of $1.29 per share.

Adobe jumped 4.2 per cent to $42.46 after its first-quarter earnings of 22 cents a share exceeded a forecast of 20 cents.

Shares in General Mills rose 2.6 per cent to $47.61 after its fiscal third-quarter adjusted earnings of 64 cents per share beat a forecast of 57 cents.

Amgen gained 1.8 per cent to $94.05 after the company reported positive data from a study of a treatment for melanoma. S&P Capital IQ affirmed its “buy” rating on the drugmaker with a price target of $104. “We see early results as promising but think they will need to show survival benefit in order to become a viable regimen for melanoma, given the approval of several new drugs in recent years,” said Steven Silver, analyst at S&P Capital IQ.

Additional reporting by Vivianne Rodrigues

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.