Apple results lift shares; bonds slip
Fed Chairman Ben Bernanke on Wednesday said U.S. monetary policy was "more or less in the right place" even though the central bank would not hesitate to launch another round of bond purchases if the economy were to weaken.
Global shares jumped on Wednesday, lifted by better-than-expected earnings from tech heavyweight Apple Inc and signs of improved sentiment in troubled euro zone debt markets.
Bonds fell slightly and the euro was flat against the dollar as investors positioned ahead of a policy statement from the U.S. Federal Reserve.
Markets expect the U.S. central bank to restate its intention to keep benchmark interest rates near zero throughout 2014 and possibly hint at more easing.
U.S. equity markets rose, with the Nasdaq climbing around 2.0 percent and the broad S&P 500 index gaining about 1 per cent.
Apple rose 9 per cent to $611.25 after it reported after markets closed on Monday quarterly profit that almost doubled from a year earlier on strong iPhone sales. The surge increased its market cap by about $50 billion.
Apple's forecast-beating results removed a weeks-old market overhang and lifted optimism in a corporate earnings season that is already far outstripping expectations. About 75 per cent of the 200 companies in the S&P 500 that have reported results so far have beat expectations, a rate that is above the norm.
"It has been a long time since I've seen one earnings report be so meaningful for the market," Rick Meckler, president of hedge fund LibertyView Capital Management in Jersey City, New Jersey, said of Apple's earnings.
The Dow Jones industrial average was up 68.31 points, or 0.53 per cent, at 13,069.87. The Standard & Poor's 500 Index was up 13.78 points, or 1.00 per cent, at 1,385.75. The Nasdaq Composite Index was up 57.27 points, or 1.93 per cent, at 3,018.87.
Investors shrugged off a Commerce Department report that showed durable goods orders for March fell 4.2 per cent, the biggest decline in three years and the latest of recent signs of softness in U.S. economic data.
"This adds to the evidence that momentum in the economy sort of fell flat in March," said Ellen Zentner, senior U.S. economist at Nomura Securities in New York.
However, non-defense capital goods shipments excluding aircraft, used to calculate gross domestic product, was much stronger than expected in March, Zentner said.
The 2.6 percent increase is "likely to lift estimates, believe it or not, for first-quarter GDP," she said. "But... this report implies a fairly weak outlook for business investment."
MSCI's world equity index rose 0.8 per cent to 325.72.
Weaker economic data also failed to halt gains in the FTSE Eurofirst index of top European shares, which provisionally closed up 1 per cent at 1,043.21.
New data showing Britain's $2.4 trillion economy had slipped back into recession served as a reminder of the wider impact of the euro zone crisis.
The euro pared its early gains and was unchanged at $1.3194. The U.S. dollar traded near break-even against a basket of major trading-partner currencies, with the dollar index off a bit at 79.183.
U.S. Treasury debt prices fell as investors reduced their bond exposure ahead of a $35 billion auction of new five-year supply and to hedge against any surprises from the Fed.
The benchmark 10-year U.S. Treasury note was down 3/32 in price to yield 1.9823 per cent.
Brent crude oil wavered on news that Iran may halt its nuclear program expansion in order to avert EU sanctions, eroding some of the risk premium.
Brent was down 12 cents to $118.04 a barrel. U.S. light sweet crude oil was off 14 cents to $103.41 per barrel.
Copyright @Thomson Reuters 2012