Stock Market News for October 22, 2014

Encouraging earnings results from the technology sector, including an earnings beat from iPhone maker Apple, boosted markets on Tuesday. Moreover, the prospect of the European Central Bank buying corporate bonds and China’s positive economic data played important roles in yesterday’s rally. The Nasdaq witnessed its best gains in 21 months and the S&P 500 registered its highest one-day gain this year.

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The Dow Jones Industrial Average (DJI.V) rose 1.3%, or 215.14 points, to close at 16,614.81. The Standard & Poor 500 (S&P 500) gained 2% to close at 1,941.28. The tech-laden Nasdaq Composite Index closed at 4,419.48; rising 2.4%. The fear-gauge CBOE Volatility Index (:VIX) declined 13.4% to settle at 16.08. A total of 3.99 billion shares were traded in NYSE on Tuesday. Advancers outpaced declining stocks on the NYSE. For 80% stocks that advanced, 18% declined.

Shares of Apple Inc. (AAPL) gained 2.7% after reporting fourth quarter earnings per share of $1.42, rising 20.1% year over year and beating the Zacks Consensus Estimate by 12 cents. The tech giant also reported a 12.4% year-over-year jump in revenues to $42.1 billion. Revenues were ahead of the Zacks Consensus Estimate of $39.9 billion. Strong global demand for iPhones was the main contributor to these impressive results. Unit sales in the U.S. grew 17% year-over-year and 20% in Western Europe. Apple had released its earnings results after the closing bell on Monday.

Texas Instruments Inc.’s (TXN) shares jumped 5.3% after posting third quarter earnings per share of 76 cents, beating the Zacks Consensus Estimate of 71 cents. Moreover, earnings grew 19.6% sequentially and 29.1% year over year. The company also forecasted fourth quarter earnings per share between 64 cents and 74 cents, above the Zacks Consensus Estimate of 62 cents.

These strong earnings results boosted the Technology Select Sector SPDR (XLK). The sector gained 2% on Tuesday. Key technology shares including Microsoft Corporation (MSFT), Facebook, Inc. (FB), Yahoo! Inc. (YHOO) and QUALCOMM Incorporated (QCOM) rose 1.8%, 2.3%, 2.3% and 2.4%, respectively.

Separately, the GDP report out of China showed that the country’s growth had slumped to its lowest level in years. However, the growth figure came in better than expected. According to the report, China witnessed growth of 7.3% in the third quarter, ahead of the consensus estimate of 7.2%. However, the growth rate was the slowest since early 2009. Additionally, factory output in China grew at a rate of 8% in September. This was an improvement of the 6.9% reported in August, the lowest growth rate in six years.

Reportedly, the European Central Bank (:ECB) may opt for a QE program where it will be buying corporate bonds in the secondary markets. The reports boosted investor confidence, as bond purchases may help with the economic recovery in the Eurozone.

On the domestic front, the National Association of Realtors reported that existing home sales rose at a pace of 2.4% in September from August to seasonally adjusted annual rate of 5.17 million. The sales figure also came in ahead of consensus estimate of 5.09 million. This was the highest rate till now this year.

The 1% rise in Brent crude oil price to $86.22 per barrel had a positive impact on the energy sector. The Energy Select Sector SPDR (XLE) was the biggest gainer among the S&P 500 sectors and gained 3% on Tuesday. Key energy stocks including Halliburton Company (HAL), Chesapeake Energy Corporation (CHK), EOG Resources, Inc. (EOG) and Schlumberger Limited (SLB) rose 5.2%, 4.9%, 3.5% and 3.3%, respectively.

However, shares of The Coca-Cola Company (KO) tumbled 6% after reporting third quarter net revenue of $11.98 billion, missing the Zacks Consensus Estimate of $12.144 billion. Revenues and earnings remained more or less flat year over year.

McDonald’s Corporation (MCD) posted third quarter revenues of $7.0 billion, lower than the Zacks Consensus Estimate of $7.2 billion. Revenues also declined 5% year-over-year. Earnings of $1.09 also declined 28% year over year. Earnings and sales were hurt by supplier issues in China and temporary store closures in Russia and Ukraine.

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Read the analyst report on MSFT

Read the analyst report on FB

Read the analyst report on YHOO

Read the analyst report on QCOM

Read the analyst report on HAL

Read the analyst report on CHK

Read the analyst report on EOG

Read the analyst report on SLB

Read the analyst report on KO

Read the analyst report on MCD


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