Corporate Profits a Boost for US Industry

Corporate America took another step along its long road to recovery on Tuesday as companies from the industrial heartland of Peoria to the technology hubs of Silicon Valley reported stronger-than-expected profits and bullish outlooks. The wave of positive second-quarter results from Caterpillar, DuPont and Apple, which came a week after several banks beat analysts’ expectations, fuelled investors’ hopes for a rebound in the US economy.

Shares in Caterpillar rose nearly 8 per cent on Tuesday after the world’s biggest maker of construction equipment un-veiled profits far ahead of Wall Street’s expectations and issued a more optimistic outlook. Its upbeat comments fuelled hopes that the global industrial economy was recovering. The manufacturer is a bellwether of the US economy but also heavily relies on overseas markets.

After the market close, Apple added to investors’ optimism with better-than-expected third-quarter results driven by strong sales of its iPhone. Apple’s results were the best-ever in a quarter not including a holiday. Chemical group DuPont and drugmaker Merck both reported a drop in second-quarter profits, but their earnings exceeded Wall Street’s forecasts. Coca-Cola results were ahead of analysts’ predictions but the world’s largest soft-drinks group warned US consumers remained under pressure – a factor underlined by steep revenue falls at three airlines: United, Continental and Southwest.

The figures from Caterpillar boosted stocks, pushing New York’s S&P 500 index to match its intra-day high for the year of 956 set last month. “Everyone is now looking for growth in the economy and people who were under-invested in stocks are being forced back into the market,” said Anthony Conroy, head equity trader for BNY ConvergEx.

After several strong sessions that sent the S&P 500 more than 8 per cent higher in the past six days, the benchmark index rose 0.4 per cent to close at 954.58. Credit Suisse on Tuesday raised its year-end target for the S&P 500, to 1,020 from 920. The S&P has not traded above 1,000 since November. Technology shares have set the pace for the market, with the Nasdaq Composite up 21.5 per cent this year.

Related Articles:

http://globaleconomicnews.blogspot.com/2009/07/alphas-betas-and-predetermined-rates-of.html

http://globaleconomicnews.blogspot.com/2009/06/world-bank-cuts-2009-global-growth.html

http://globaleconomicnews.blogspot.com/2009/07/big-media-seek-21st-century-business.html

http://globaleconomicnews.blogspot.com/2009/07/greenspan-fears-inflation.html

http://globaleconomicnews.blogspot.com/2009/07/uk-economy-shrinks-most-in-50-years.html

http://globaleconomicnews.blogspot.com/2009/06/microlending-taking-off-in-us.html

http://globaleconomicnews.blogspot.com/2009/06/at-stanford-research-surpasses.html

Source: http://www.ft.com/cms/s/0/4bbd740a-7622-11de-9e59-00144feabdc0.html