US stocks rallied on Thursday after a boost by strong Q3 earnings from Caterpillar Inc. and other companies.
The Dow Jones Industrial Average gained 1.55 or 254 points to 16,717 while the S&P 500 gained 1.4% or 27 points to 1,954. The Nasdaq Composite Index gained 1.7% or 73 points to 4,456.
According to the Wall Street Journal, US shares were lifted by intraday recovery of European stocks and upbeat earnings from blue-chip companies. Caterpillar posted better than estimated results for Q3 and lifted its 2014 profit outlook from $6.20 per share to $6.50. The shares climbed 5.5%, making it the Dow’s second best performer.
In average, the best performer was 3M Co., gaining 6.1% after reporting strong quarterly results and it increased its forecast for 2014.
Wells Fargo Funds Management chief portfolio strategist, Brian Jacobsen said, “Earning are coming to the rescue for this market. A company like Caterpillar, while it’s not the biggest out there, is typically viewed as a bellwether of growth in the emerging markets.”
Reuters quoted Federated Investors chief equity market strategist, Phil Orlando as having said, “It’s good to see good number in any company, but if we’re looking at headwinds like currency and slowing global growth, seeing multinationals like Caterpillar and 3M post solid beats gives us confidence that economic growth is holding on and probably better than the market is currently expecting.”
Short-term investors were caught by surprise by the European gains and strong earnings. This has let them scrambling to reduce their bets that stocks would extend the declines of the previous session. On Wednesday, the S&P 500 dropped 0.75 to 1,927.11.
UBS AG head of single-stock derivates, Jeffrey Yu said, “On Wednesday, trader got very aggressive in reducing positions, and expected one last leg down.”
The Stoxx of Europe gained 0.7%.
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