Bullish investors pushed Wall Street to a one-month high on Wednesday as falling oil prices and strong showings from the technology sector fueled expectations of an end-of-the-year rally.
The Dow Jones Industrial Average closed 0.6 per cent higher to 10,472.73 while the S&P 500 rose 1 per cent to 1,214.76. The Nasdaq Composite Index outshone its peers, rising 1.4 per cent to 2,144.31.
Analysts took the gains in small caps and cyclical stocks as a sign of rising investor confidence. But some cautioned that the session’s gains might be psychologically driven rather than based on sound fundamentals.
“Buying begets buying,” said Peter Boockvar, equity strategist at Miller Tabak. “The mood is getting exaggerated because everyone is conditioned to expect a strong November rally. So some people are buying simply because they don’t want to miss out on the rally.”
Easing oil prices gave a boost to the energy sector and energy-sensitive stocks such as transport companies.
Retailers, whose shares have been weighed down by concern that consumer spending for the holiday season would be squeezed by high energy costs, also saw some respite.
Shares in Sears rose 3.9 per cent to $122.87 while Best Buy added 3.5 per cent to $46.02 and Target gained 3.1 per cent to $57.01.
Time Warner dominated the spotlight on the corporate earnings front. The media conglomerate rose 1.9 per cent to $17.90 after it reported an 80 per cent increase in its third quarter earnings, beating analysts’ expectations.
The company, whose subsidiaries include Warner Bros, HBO, CNN and Time magazine, said the gains were driven by a rise in subscribers for its cable, high-speed internet and digital phone services as well as increased earnings from its television networks.
Shares were further bolstered by news that Time Warner had increased this year’s stock buy-back from $5bn to $12.5bn.
Cablevision Systems also announced it was returning cash to investors. The cable television operator rose 1.4 per cent to $25.76 after it announced a $3bn one-time dividend payout to all shareholders.
Playboy, publisher of the men’s magazine, failed to capitalise on the upward trend. Shares fell 11.1 per cent to $13.57 after posting lacklustre third quarter earnings.
General Motors shares lost 2.4 per cent to $26.54 after the credit of the world's largest automaker was downgraded after the Tuesday close.
Software stocks took a beating, with anti-virus software maker Symantec falling 19.3 per cent to $19.37 while Sun Microsystems dropped 3.1 per cent to $3.73 on news of disappointing third quarter earnings.
Losses in Mercury Interactive added to the sector’s woes. The US-Israeli software maker fell 26.7 per cent to $25.66 after replacing its chief executive.
Cigna shares sank 6.1 per cent to $110.37, after the insurance group reported a 16 per cent fall in quarterly profits.
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