Shares edge up, whipsawed by dollar, earnings

By Edward Krudy

NEW YORK (BestGrowthStock) – Wall Street edged higher in a volatile session on Thursday, torn between strong corporate earnings and a surge in the U.S. dollar.

The market swung in a wide range throughout the day as investors reacted to gyrations in the currency markets and as relatively strong earnings took a back seat.

But by the end of the session, the fundamental picture seemed to win out. The Dow rose, helped by McDonald’s Corp (MCD.N: ) and Travelers Cos Inc (TRV.N: ), both of which hit 52-week highs after stronger-than-expected results.

“Companies are continuing to show that they are continuing to make money in a low nominal GDP environment and that they are very good at it and they can continue to do so,” said Paul Zemsky, head of asset allocation at ING.

Investors have been trading the dollar and equities against each other recently as expectations the Federal Reserve will pump billions into the economy have pressured the greenback while lifting stocks.

Commodity-linked stocks have been among the most sensitive to the trade. Occidental Petroleum Corp (OXY.N: ) fell 2.7 percent to $78.80 while the S&P energy index (.GSPE: ) edged lower as oil dropped more than 2 percent to under $81 per barrel.

“The trade has been: Weak dollar is good for commodities and is good for any risk-related assets like equities. On dollar weakness, buy those things; on dollar strength, get out of those things,” said Bill Strazzullo, partner and chief investment strategist at Bell Curve Trading in Boston.

The euro and the popularly traded S&P E-mini futures contract have tracked each other closely in the last month. In the past 22 sessions, they have had a positive correlation coefficient of 0.89.

The euro had earlier climbed to a high around $1.4050 but later was trading down 0.3 percent to $1.3920.

The Dow Jones industrial average (.DJI: ) gained 38.60 points, or 0.35 percent, to 11,146.57. The Standard & Poor’s 500 Index (.SPX: ) gained 2.09 points, or 0.18 percent, to 1,180.26. The Nasdaq Composite Index (.IXIC: ) gained 2.28 points, or 0.09 percent, to 2,459.67.

Banking stocks were weak as investors continued to wrestle with confusion in the mortgage market and the chance Bank of America (BAC.N: ) might have to buy back mortgages bonds. The stock fell 3.3 percent to $11.36 and has lost nearly 16 percent over the last 7 days.

“People have been talking about Bank of America for the last few days, and they’re going to continue to talk about bank of America until they get better direction from management,” said Weston Boone, vice president listed trading at Stifel Nicolaus Capital Markets.

McDonald’s gained 1.3 percent to $78.44 after it beat expectations for quarterly profit and same-store sales growth in September.

Travelers gained 0.6 percent to $54.98 after the largest publicly traded U.S. property casualty insurer easily beat estimates as premiums rose in its personal insurance lines.

Stocks rose nearly 1 percent earlier but the gains were trimmed by afternoon trade as the U.S. dollar (.DXY: ) gained ground. The dollar was up 0.4 percent against major currencies, while the euro fell (Read more about the trembling euro. ) 0.3 percent.

Online auctioneer eBay (EBAY.O: ) rose 6 percent to $27.19 and Netflix (NFLX.O: ), the movie rental and streaming service, jumped 12.8 percent to $172.69 after both reported upbeat results late Wednesday.

Home Depot Inc (HD.N: ) rose 3.5 percent to $31.81. Stifel Nicolaus reiterated its “buy” rating on the stock, citing attractive valuations after a meeting with company executives.

(Reporting by Edward Krudy; Editing by Kenneth Barry)

Shares edge up, whipsawed by dollar, earnings