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Stocks rise on earnings; sterling falls

Published Jul 23, 2019 11:14AM ET
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By Stephen Culp

NEW YORK (Reuters) - A host of upbeat earnings pushed U.S. stocks higher on Tuesday and world stocks rose in anticipation of central bank easing, while pound sterling fell on the expected confirmation of hard-Brexit advocate Boris Johnson as Britain's next prime minister.

Dow components Coca-Cola (NYSE:KO) Co and United Technologies Corp (NYSE:UTX) both beat second-quarter earnings expectations as the reporting season shifts into high gear.

"You're having good results from a variety of companies and that has put a positive spin on the opening," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

The International Monetary Fund cut its global growth forecast through 2020 over concerns about the protracted tariff spats between the United States and its trading partners and the prospect of a disorderly Brexit.

"The IMF is just stating the obvious," Tuz added. "The tariffs have cast a pall on global trade."

The Dow Jones Industrial Average rose 92.12 points, or 0.34%, to 27,264.02, the S&P 500 gained 8.71 points, or 0.29%, to 2,993.74 and the Nasdaq Composite added 12.86 points, or 0.16%, to 8,216.99.

The European STOXX 600 benchmark rose over 1%, helped by a 6% surge in automakers and growing certainties of policy easing from the European Central Bank and the U.S. Federal Reserve.

The pan-European STOXX 600 index rose 1.20% and MSCI's gauge of stocks across the globe gained 0.31%.

The dollar hit a two-week high against a basket of world currencies, on the heels of a congressional deal to extend the U.S. debt limit for two years, easing fears of a government default.

"The budget deal is also a minor worry that's been pushed aside for a while," said Tuz.

But the British pound slid after Brexit advocate Johnson won the Conservative Party leadership race and will replace Theresa May as the country's prime minister.

With Johnson at the helm, credit ratings agency Moody's and investment Goldman Sachs (NYSE:GS) both warned the risk of a no-deal Brexit was now higher.

"We raise our odds on a 'no deal Brexit from 15% to 20%, and we reduce our odds on 'no Brexit' at all from 40% to 35%," Goldman said.

The dollar index rose 0.44%, with the euro down 0.5% to $1.1152.

The Japanese yen weakened 0.24% versus the greenback at 108.14 per dollar, while sterling was last trading at $1.2435, down 0.31% on the day.

Brent crude prices eased as worries faded over escalating tensions in the Middle East following Iran's seizure of a British oil tanker.

U.S. crude fell 0.32% to $56.04 per barrel and Brent was last at $63.00, down 0.41% on the day.

U.S. Treasury yields inched higher as market participants eyed upcoming ECB and Fed meetings for new signals about how many interest rate cuts can be expected.

Benchmark 10-year notes last fell 3/32 in price to yield 2.0533%, from 2.043% late on Monday.

The 30-year bond last fell 11/32 in price to yield 2.5857%, from 2.57% late on Monday.

Gold prices eased to a near one-week low following the U.S. congressional debt ceiling deal.

Spot gold dropped 0.1% to $1,423.69 an ounce.

Copper lost 1.10% to $5,951.50 a tonne.

Three-month aluminum on the London Metal Exchange rose 0.08% to $1,817.50 a tonne.

Stocks rise on earnings; sterling falls
 

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Comments (2)
Bagger Vance
Bagger Vance Jul 23, 2019 3:38AM ET
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They will cut, even if micro-cut, they will
TYRONE MORGAN
TYRONE MORGAN Jul 23, 2019 2:12AM ET
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They've been hoping and wishing for a Fed rate cut for how long now? Give it up, they'll cut when they cut, meanwhile, let's focus on the basics, you know earnings, revenue, markets... instead of rabbit's feet and four-leaf clovers.
 
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