Jan 23 (BusinessDesk) – Wall Street advanced amid optimism that quarterly corporate earnings will continue to surpass modest expectations.
Shares of Freeport McMoRan, Travelers Cos and DuPont received a boost from their results that bettered expectations, rising 5.1 percent, 2.8 percent and 1.8 percent respectively.
Johnson & Johnson, however, failed to deliver, and shares were last 0.6 percent lower.
So far, 73 percent of the 74 companies in the S&P500 that have released results beat projections, according to data compiled by Bloomberg. Analysts on average forecast growth of 3.8 percent in fourth-quarter profit, the data show.
After the market closes today, Google, IBM and Texas Instruments are expected to report results.
In afternoon trading in New York, the Dow Jones Industrial Average rose 0.22 percent, while the Standard & Poor's 500 Index advanced 0.16 percent. The Nasdaq Composite Index fell 0.17 percent. On Monday, US markets were closed for the Martin Luther King Jr holiday.
"The market is playing wait-and-see to see the way the earnings come in this week because you've got some biggies," Fred Dickson, chief market strategist at DA Davidson & Co, in Lake Oswego, Oregon, told Reuters.
Data on the economic front were mixed. Home resales surprisingly dropped in December, declining 1 percent to a 4.94 million annual rate, according to National Association of Realtors data. The report didn't alter the view that the American housing market is experiencing a sustained recovery.
“This isn’t worrisome at all,” Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh, who projected a drop to a 4.95 million annual rate, told Bloomberg News. “For the first time in a while, it looks like it’s a sellers’ market as much as it’s a buyers’ market. I suspect prices and sales will go up again in 2013.”
Separately, the Federal Reserve Bank of Richmond's manufacturing index dropped to minus 12 this month, the lowest level since July, from 5 in December.
In Europe, the Stoxx 600 Index ended the day advancing less than 0.1 percent from the previous close. National benchmark indexes in Germany and France dropped, declining 0.7 percent and 0.6 percent respectively.
In Germany investor confidence accelerated more than expected, climbing to the highest level since May 2010. The ZEW Centre for European Economic Research said its index of investor and analyst expectations rose to 31.5 in January from 6.9 in December.
The Bank of Japan ratcheted up its efforts to help kick-start the moribund economy with an open-ended mandate to buying assets next year and doubling its inflation target to 2 percent.
"They've gone further than I thought by introducing the open-ended plan," Joseph Capurso, currency strategist at Commonwealth Bank of Australia in Sydney, told Reuters. However, "[w]hat surprises me is they won't start until 2014. That's very odd and different from what the Federal Reserve did, which was immediate."
The yen strengthened against the greenback, last up 1.1 percent to 88.63 per dollar.