Better-than-expected US jobs data helped propel Wall Street as did corporate earnings that exceeded expectations such as from United Parcel Service.
“Companies have gotten very good at controlling expectations. This has been a pattern of crunching down of estimates prior to earnings being released, and when earnings come out, they beat the number,” Stephen Massocca, managing director at Wedbush Equity Management in San Francisco, told Reuters. “Every earnings season, the bar is somewhere where they can get over it.”
So far ahead of expectations was Cliffs Natural Resources, an iron ore producer, that its shares soared 17.8 percent. Shares of UPS rose 2.4 percent as investors liked its earnings report and outlook.
“The first quarter was particularly challenging for [international] … but we feel that the business is prospering and global trade, especially within Europe and Asia, will continue to grow,” UPS Chief Financial Officer Kurt Kuehn told Reuters. “So that’s probably the area that we’ll see the most improvement year over year [in the second quarter].”
Yet, some clearly failed to clear the bar. Shares of Exxon Mobil and 3M slid, down 1.1 percent and 2.7 percent respectively, as their earnings fell short.
There was some good news from the economic front, a welcome sign in the recent string of tepid numbers. First-time jobless claims dropped 16,000 in the week ended April 20 to 339,000, the lowest since March 9, according to Labor Department data.
“We have a labour market recovery that’s ongoing,” Guy Berger, an economist at RBS Securities in Stamford, Connecticut, told Bloomberg. “The labour market has its ups and downs, but the direction shows things are getting better. Companies are willing to increase their headcounts but at a very slow pace.”
In afternoon trading in New York, the Dow Jones Industrial Average rose 0.46 percent, the Standard & Poor’s 500 Index gained 0.81 percent, while the Nasdaq Composite Index advanced 0.91 percent.
In Europe, the Stoxx 600 Index climbed 0.8 percent from the previous close as an increasing number of economists predict the European Central Bank is set to lower borrowing costs next week. Germany’s DAX added 1 percent.
Twenty-four of 40 economists surveyed by Bloomberg expect the ECB to cut its benchmark interest rate by a quarter percentage point to 0.5 percent.
Underpinning those expectations were the latest labour data showing that unemployment hit record highs in both Spain and France. The unemployment rate in Spain rose to 27.16 percent of the workforce in the first three months of the year, up from 26.02 percent in the previous three months.
More than six million Spaniards were out of work in the first quarter; more than three million French were without work in March.
There was a sigh of relief in the UK. The nation’s gross domestic product expanded a better-than-anticipated 0.3 percent in the first quarter after shrinking 0.3 percent in the previous quarter. The FTSE 100 finished the day 0.2 percent higher.