As Cyprus continued its efforts to seek financial help that will prevent its bankruptcy, investors turned their focus toward positive news from companies including Lennar and Adobe.
Cypriot lawmakers yesterday vetoed a proposal, suggested by European Union and International Monetary Fund leaders, to tap bank deposits to help fund a much-needed bailout. Desperate for alternatives, Cyprus is now in talks with Russia to secure funding but progress is slow.
Still, investors believe the fallout from the crisis surrounding the latest euro-zone victim of an unsustainable debt load may remain limited.
“There’s global relief the Cypriot situation doesn’t appear to be as bad as it looked on Sunday night,” Fred Dickson, chief market strategist at DA Davidson & Co in Lake Oswego, Oregon, told Reuters.
The euro gained 0.6 percent against the US dollar and improved 1 percent against the Japanese yen. Europe’s Stoxx 600 Index ended the day with a 0.3 percent advance from the previous close.
Benchmark indexes in France and Germany rose, closing 1.4 percent and 0.7 percent stronger respectively.
The UK’s FTSE fell 0.1 percent as the government’s budget watchdog downgraded its economic growth forecasts for 2013 and 2014.
In afternoon trading in New York, the Dow Jones Industrial Average climbed 0.36 percent, while the Standard & Poor’s 500 Index gained 0.54 percent, and the Nasdaq Composite Index rose 0.58 percent.
Shares of Lennar jumped, last up 4.9 percent, after the American homebuilder posted better-than-expected earnings indicative of the sustained recovery seen in the domestic housing market.
“Our first quarter results clearly reflect continued improvement in the marketplace,” Lennar CEO Stuart Miller said in a statement. “Current market conditions are driven by strong demand resulting from low interest rates and attractive home prices, which have led to very affordable monthly payments, compared to increasing rental rates. Supply continues to be limited by low home inventories and fewer competing homebuilders.”
Shares of Adobe also gained, last up 4.5 percent, as the software maker posted results that surpassed expectations.
Shares of FedEx dropped, last down 6.1 percent, after the company downgraded its full-year forecast because of slowing demand for its premium service.
“Volumes are pretty healthy, but when you dial down and see where volumes are healthy, it’s on much lower-yielding freight,” Logan Purk, a St. Louis-based analyst at Edward Jones & Co who has a buy rating on the shares, told Bloomberg News. “When you look at yields, they’re compressing. That’s what’s biting FedEx.”
The US Federal Reserve, as expected, decided to keep its current policy unchanged, maintaining its monthly pace of bond purchases at US$85 billion.
Data since the previous meeting of Fed policy makers in January “suggests a return to moderate economic growth following a pause late last year,” the Fed said in a statement released at the end of a two-day meeting. Even so, the committee “continues to see downside risks to the economic outlook.”