Politics
Trail Guide: Live coverage of the first Clinton-Trump debate
BUSINESS

Stocks end higher as Citi, others report strong earnings

A new financial lifeline for Greece and strong corporate earnings on Thursday helped push U.S. stocks higher.

Stocks rose from the start, following a jump in major European indexes, as strong second-quarter results from Netflix, eBay, Citigroup and other companies fed the buying. By the end of the day, nine of 10 industry sectors of the Standard and Poor's 500 index posted gains.

Investors have been worried about a possible Greek financial collapse, plunging Chinese stocks and Puerto Rico's struggles to pay its debt. But investors put those concerns aside as upbeat second-quarter company results suggested that earnings may turn out better than expected. A key gauge of anxiety among investors, the VIX, was down nearly 40 percent on Thursday from a week ago.

“Some of the red flags in the market have come down, and now the market can look to earnings,” said Kevin Dorwin, managing principal of Bingham, Osborn & Scarborough, a San Francisco-based investment firm.

The S&P 500 gained 16.89 points, or 0.8 percent, to 2,124.29. The Dow Jones industrial average climbed 70.08 points, or 0.4 percent, to 18,120.25. The Nasdaq composite climbed 64.24 points, or 1.3 percent, to 5,163.18.

Stocks in Europe got a boost from news that Greek lawmakers approved tax hikes, cuts to pensions and other measures demanded by its creditors. That was followed by an announcement from the European Union that it would provide a short-term loan to Greece to help it cover its debts through mid-August. And the European Central Bank said it would raise the amount of emergency liquidity available to the country's banks.

Germany's DAX and France's CAC-40 each climbed 1.5 percent.

Among U.S. companies posting earnings, Netflix was a big winner. Its stock soared 18 percent, the biggest gain in the S&P 500. Investors were reacting to an announcement late Wednesday that the company had added far more streaming-video subscribers than projected in the second quarter, 3.3 million. The shares climbed $17.68 to $115.81.

Since the start of earnings season a week ago, 38 companies in the S&P 500 have reported results and most have beaten expectations. That has raised hope that earnings won't be as bad as many have feared. S&P Capital IQ, a financial data provider, is predicting that earnings at companies in the S&P 500 will fall 3.8 percent from a year earlier.

Earnings expectations may be low, but “if today is any indication, three-quarters of the companies will beat,” said Jack Ablin, chief investment officer of BMO Private Bank.

Citigroup climbed $2.13, or 3.8 percent, to $58.59 after announcing profits had rebounded in the second quarter from a year earlier, when the bank had recorded a huge legal settlement for its role in the housing bubble and financial crisis.

Companies reporting Friday include General Electric, Honeywell and Kansas City Southern.

Among other stocks making moves:

— EBay rose $2.15, or 3.4 percent, to $65.59 after announcing earnings that topped Wall Street expectations. The company also said it sold a business that helps develop online sites for retailers as it prepares to spin off PayPal.

— Goldman Sachs fell $1.78, or 0.8 percent, to $211.18 after reporting second-quarter profit fell by half on higher provisions for mortgage-related litigation and regulatory matters.

— Google jumped $62.17, or 10 percent, to $663.50 in after-market trading on better-than-expected earnings and revenue gains.

In China, the Shanghai Composite Index rose after two days of big drops, climbing 0.5 percent.

Benchmark U.S. crude lost 50 cents to close at $50.91 a barrel in New York. Brent crude, a benchmark for international oils used by many U.S. refineries, rose 46 cents to close at $57.51 a barrel in London.

In other futures trading on the New York Mercantile Exchange:

— Wholesale gasoline rose 3.8 cents to close at $1.897 a gallon.

— Heating oil fell 0.3 cent to close at $1.666 a gallon.

— Natural gas declined 6.4 cents to close at $2.854 per 1,000 cubic feet.

U.S government bond prices didn't move much. The yield on the 10-year Treasury note held steady at 2.35 percent.

Precious and industrial metals futures closed mostly lower. Gold lost $3.50 to $1,143.90 an ounce, silver fell 6 cents to $14.96 an ounce and copper was little changed at $2.53 a pound.

 

Copyright © 2016, Los Angeles Times
93°