5:40 PM, New York – Markets in New York extended gains for the eighth day and for the fourth week in a row and the S&P 500 index closed above 1,500 for the first time since December 2007. Positive earnings and rising expectations in Europe and Japan lifted world markets. Gold and copper eased.
Market indexes advanced and extended gains to new 5-year highs after the latest batch of earnings from Procter & Gamble, Honeywell, Starbucks and Kimberly-Clark.
The S&P 500 index gained 1.1% and closed above 1,500 for the first time since December 2007 and advanced for the eighth session in a row.
Market sentiment was also bolstered after the second economic indicator in Germany in as many days showed an improvement but the UK is struggling to avoid recession after the economy shrank more than expected in December quarter.
U.S. new home sales decreased 7.3% to annual rate of 569,000 in December but rose to the highest in 2012 in three years. The Commerce Department lifted its estimate of new home sales by 220,000 to 398,000 annual rate in November, the fastest rate since April 2010.
In corporate news, AT&T second quarter net loss narrowed and Covidien first quarter net slid to $493 million. Honeywell fourth quarter net swung to profit. Microsoft second quarter net slipped 4%. Kimberly-Clark fourth quarter net declined 33% and P&G net surged 140%.
Netflix added 15% more to 40% gain in yesterday’s trading after the online video streaming company reported better than expected results and billionaire Carl Ichan who controls 10% stake said stock could rise more.
European markets advanced to a new 2-year high after more than expected banks are scheduled to repay loans to ECB next week. Banks led the gainers and the indexes higher in otherwise weak earnings season so far. German business climate index increase offered another signal of improving conditions in the euro zone.
Market indexes advanced in 13 of the 17 nations across the region after the European Central Bank said 278 banks will repay loans totaling 137.2 billion euros next week. The early repayment of loans and higher than expected amount indicated at least parts of the euro zone financial system is getting healthier.
The latest index of business confidence released by a private research institute pointed to a sharp improvement in the outlook for business.
The Ifo business climate index increased to 104.2 in January from 102.4 in December, ahead of expectations set by economists.
UK’s economy contracted at 0.3% annual rate in the final quarter to December according to the latest data released by the Office for National Statistics. The service industry was flat and output of production industries declined 1.8%, manufacturing fell 1.5%.
UK rebounded from a nine-month recession in the third quarter when the GDP increased 0.9% and may fall into a recession if the economy shrinks again first quarter in 2013.
Moody’s, S&P and Fitch, all three major rating agencies have placed the UK’s debt on negative watch.
In Asia markets rebounded after the yen declined and stocks in Tokyo surged and the Nikkei index closed high for the eleventh week in a row. Investors bid up stocks in anticipation of a change in leadership at the Bank of Japan. Consumer prices declined in December 0.2%, a seventh monthly decline in the last eight months. Prices fell 0.1% in 2012 in Japan as nation struggles to contain bout of deflation for more than a decade.
In Mumbai, Biocon third quarter net climbed 8.1% and Coromandel Intl net declined 47.6%. Maruti Suzuki net more than doubled. Reliance Power net profit soared 30%. Sesa Goa net profit declined 28%.
Stocks in Sydney advanced for the eighth day in a row and market indexes closed at a new 21-month high. Karoon Gas gained after it reported oil discovery off the coast of Brazil. MacMahon declined 4% on the worries that its Mongolian customer has financing difficulties.
Commodities, Bonds and Currencies
U.S. treasury yield on 10-year bond closed up to 1.95% and on 30-year bond edged up to 3.13%.
The U.S. dollar inched lower to $1.347 to a euro and increased against the Japanese yen to 90.91 yen.