Earnings boost stocks; Greece weighs on euro

By Walter Brandimarte

NEW YORK (BestGrowthStock) – Stocks rose on Tuesday as strong corporate earnings fueled optimism about the global economy and energy shares rose as the price of crude oil gained as some European flights resumed as the threat from Iceland’s volcanic ash receded.

The optimism over the economy reduced the safe-haven appeal of the U.S. dollar and the Japanese yen, but the euro weakened against the dollar on concerns Greece might need a large aid package.

Wall Street powerhouse Goldman Sachs Group Inc (GS.N: ) reported its quarterly earnings more than doubled, which deflected attention from fraud accusations against the bank by U.S. securities regulators. [ID:nASA008KM] The Goldman results came a day after Citigroup Inc (C.N: ) announced its best quarterly results in nearly three years.

“The focus from the Goldman Sachs investigation has shifted back to earnings, the true driver of markets,” said Andre Bakhos, director of market analytics at Lek Securities in New York. “Optimism about this earnings season seems to be coming back into play.”

The Dow Jones industrial average (.DJI: ) climbed 45.95 points, or 0.41 percent, to 11,138.00, while the Standard & Poor’s 500 Index (.SPX: ) gained 9.88 points, or 0.83 percent, to 1,207.40. The Nasdaq Composite Index (.IXIC: ) was up 17.50 points, or 0.71 percent, at 2,497.61.

Goldman Sachs’ shares fell 1.3 percent despite its strong results, but financial stocks overall were stronger, with the KBW bank index rising 1.4 percent.

And energy stocks gained as crude oil futures topped $83 a barrel, with the S&P energy index (.GSPE: ) up 1.7 percent.

But gains were modest as investors found some cracks in corporate results. International Business Machines Corp (IBM.N: ) reported better-than-expected profits but its gross margins disappointed investors, and its shares fell 2.1 percent. Coca-Cola Co (KO.N: ) reported mixed results, and its shares slipped 1.7 percent.

In Europe, the FTSEurofirst 300 index (.FTEU3: ) of top shares ended 1.4 percent higher, with automakers boosted by above-forecast results at Daimler (DAIGn.DE: ) and energy companies gaining on the stronger crude prices.

“Results have driven shares higher. After a couple of down days Citi came out with stellar results and people started buying again,” said Mic Mills, senior trader at ETX Capital.

The MSCI world equity index (.MIWD00000PUS: ) gained 0.9 percent while the MSCI index of emerging market stocks (.MSCIEF: ) jumped 1.3 percent as commodity prices rose.

U.S. crude oil leaped $1.89, or 2.32 percent, to $83.34 per barrel, and spot gold prices rose 0.41 percent, to $1,139.20 an ounce. The Reuters/Jefferies CRB Index (.CRB: ) of commodity futures gained 0.97 percent.

Oil investors have been studying broader financial markets, like company shares, since last year for signs of economic recovery that would point the way to higher fuel consumption.

“It is up because of stronger equities and lower risk aversion. The start of European flights is at least having a psychological impact on the market,”” said Carsten Fritsch, a commodities analyst at Commerzbank.


Greater risk appetite hurt the U.S. dollar, which was trading nearly stable against a basket of major currencies, according to the U.S. Dollar Index (.DXY: ).

Against the Japanese yen, the dollar was up 1 percent at 93.35 yen, a day after the yen reached a one-month high against the greenback.

The euro weakened 0.33 percent to $1.344 as concerns about the Greek fiscal situation increased.

European Central Bank Governing Council member Axel Weber said Greece may require assistance of up to 80 billion euros to avoid default, according to a report in the Wall Street Journal on Tuesday.

That amount would be far larger than the 30 billion euro aid mechanism agreed by euro zone finance ministers earlier this month.

Fears about Greece’s finances led the premium investors demand to buy the country’s sovereign bonds to rise to fresh highs.

The yield spread between Greek and German 10-year bonds widened to 489 basis points, a euro lifetime wide, versus 468 basis points at Monday’s settlement close, according to Tradeweb.

Those concerns also provided some safe-haven demand for U.S. Treasuries, although prices of U.S. debt were mostly lower on the earnings optimism.

The benchmark 10-year U.S. Treasury note fell down 5/32 in price, with the yield at 3.8207 percent, while the 30-year U.S. Treasury bond was up 1/32, with the yield at 4.6921 percent.

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(Editing by Leslie Adler)

Earnings boost stocks; Greece weighs on euro