'Strong Performance is the Best Medicine'... NY Stock Market Closes with a Sharp Rise

by Paek Jongmin

Published 15 Oct.2021 06:33(KST)

[Asia Economy New York=Correspondent Baek Jong-min] The major indices of the New York stock market showed a sharp rise, supported by strong corporate earnings.

[Image source=Reuters Yonhap News]

On the 14th (local time), the Dow Jones Industrial Average rose 534.75 points (1.56%) to close at 34,912.56, the S&P 500 index rose 74.46 points (1.71%) to 4,438.26, and the Nasdaq index rose 251.79 points (1.73%) to 14,823.43.

The S&P 500's rate of increase was the highest in seven months. It is analyzed that financial companies that announced earnings that day all reported results exceeding expectations, stimulating investor sentiment. This means that strong corporate earnings have offset the negative factors such as rising inflation, supply chain disruptions, and energy crises that had dampened investor sentiment.

Bank earnings from Bank of America (BoA), Citigroup, Wells Fargo, Morgan Stanley, and others exceeded market expectations, raising anticipation for the third-quarter earnings season.

BoA announced that its third-quarter profits surged 58% due to the impact of rising interest rates.

BoA led the stock price gains with a 4.5% rise, Morgan Stanley rose 2.5%, and Citigroup rose 0.8%. Wells Fargo fell 1.6% despite strong earnings.

Walgreens Boots Alliance showed an exceptional surge of 7.4%, fueled by strong earnings and merger and acquisition news. UnitedHealth also soared 4.2%.

Heavy equipment maker Caterpillar rose 2.8% on news of an upgraded investment rating.

Mark Hafel, Chief Investment Officer (CIO) of UBS, said, "Despite rising labor costs, the earnings of major U.S. corporations were very solid," expressing optimism about the third-quarter earnings season.

Despite the Federal Reserve (Fed) signaling a tapering of asset purchases in November, the 10-year U.S. Treasury yield fell to 1.523%, leading to a broad rally in tech stocks. Apple, Microsoft, Alphabet, and others each rose more than 2%.

Bond yields declined after the September Producer Price Index (PPI) was announced to have risen 0.5% month-over-month, falling short of market expectations.

The weekly initial jobless claims announced that day also fell below 300,000 for the first time since the COVID-19 pandemic, recording 293,000 claims, which further fueled market gains.

Hard disk maker Western Digital rose 4.3%.

Virgin Galactic, which announced after regular trading hours that it would delay the start of commercial space travel to the fourth quarter of next year, plunged 12.55% in after-hours trading.