Global stock markets diverged Wednesday, with Wall Street pushing higher on the back of strong earnings, while European indexes slipped on a mixed bag of corporate results and signs the US Federal Reserve is likely to tight on interest rate cuts in the coming months.
In New York, the broad-based S&P 500 rose to close just short of the 5,000-point mark after a string of fresh record highs.
The Dow and the Nasdaq also finished higher.
US optimism was fueled by the most recent corporate earnings, with automaker Ford beating estimates in results released late Tuesday, while Chipotle Mexican Grill also exceeded market expectations.
Ford’s shares finished the day up more than six percent, and Chipotle more than seven percent.
And Disney’s shares also rose in after-hours trading after it posted quarterly results that beat expectations.
“The market keeps on rolling higher,” Spartan Capital chief market economist Peter Cardillo told AFP.
“It’s about earnings,” he said. “The earnings season is favoring stocks at this time and investors like what they are hearing in term of guidance.”
– Rate cut patience –
Economic resilience in the United States has dampened hopes that the Fed will start cutting rates anytime soon, despite data indicating that inflation is continuing to ease toward its long-term target of two percent.
On Wednesday, two more senior Fed officials came out to suggest that interest rate cuts are still some way off.
“Job gains, unemployment, job openings, initial jobless claims, all of these metrics are very strong and inflation is coming down,” Richmond Fed president Tom Barkin told an event in Washington.
“So I’m very supportive of being patient, you know, to get to where we need to get,” he said.
“I am pleased by the progress on inflation, and optimistic it will continue, but I will be watching the economic data closely to verify the continuation of this progress,” Fed Governor Adriana Kugler said during a separate event in the city on Wednesday.
Both Kugler and Barkin have a vote on interest rate policy, and their remarks reflect other recent remarks from Fed officials voicing hesitancy about cutting rates too soon.
“Fed probabilities of a rate cut continue to get pushed out,” said Nathan Peterson, director of derivatives analysis at the Schwab Center for Financial Research.
– Locking in profits –
While US stocks closed up, the picture in Europe was less positive: London, Paris and Frankfurt all ended lower as investors locked in profits from recent gains.
In the UK, British housebuilder Barratt agreed to buy competitor Redrow for £2.5 billion (around $3.2 billion) amid a housing market that has been hit by higher interest rates.
Shares in Barratt dropped 5.5 percent on the news, but Redrow surged 15 percent.
In Paris, shares in French oil and gas giant TotalEnergies fell three percent after its profits for last year came in below expectations.
Norwegian energy group Equinor took a bigger market beating, falling nearly eight percent in Oslo after reporting that its annual net profit plunged 59 percent to $11.9 billion on lower oil and gas prices.
In Germany, official data showed that industrial production fell for a seventh straight month in December, capping a year of manufacturing weakness in Europe’s largest economy.
And in Asia, announcements this week out of Beijing continued to light a fire under equities in Shanghai, though Hong Kong succumbed to profit-taking.
– Key figures around 2130 GMT –
New York – Dow: UP 0.4 percent at 38,677.36 points (close)
New York – S&P 500: UP 0.8 percent at 4,995.06 (close)
New York – Nasdaq Composite: UP 0.8 percent at 15,756.64 (close)
London – FTSE 100: DOWN 0.7 percent at 7,628.75 (close)
Paris – CAC 40: DOWN 0.4 percent at 7,611.26 (close)
Frankfurt – DAX: DOWN 0.7 percent at 16,921.96 (close)
EURO STOXX 50: DOWN 0.3 percent at 4,678.85 (close)
Tokyo – Nikkei 225: DOWN 0.1 percent at 36,119.92 (close)
Hong Kong – Hang Seng Index: DOWN 0.3 percent at 16,081.89 (close)
Shanghai – Composite: UP 1.4 percent at 2,829.70 (close)
Euro/dollar: UP at $1.0777 from $1.0758 on Tuesday
Pound/dollar: UP at $1.2628 from $1.2600
Euro/pound: DOWN at 85.32 pence from 85.36 pence
Dollar/yen: UP at 148.16 yen from 147.91 yen
Brent North Sea Crude: UP 0.8 percent at $79.21 per barrel
West Texas Intermediate: UP 0.5 percent at $73.86 per barrel
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