Wall Street wow
by Peter Switzer
As Pamplona in Spain celebrated the “running of the bulls”, on Wall Street in New York, the bulls, at long last, ran over the top of the bears with a big rally on the New York Stock Exchange. The Dow was up over 270 points at the close and this should make the market optimists breathe a sigh of relief.
And, in a good sign for our banks today, US financial institutions had a great day at the office helped along by oversold tech stocks.
The trigger was what I have been tipping, or maybe praying for – some better than expected corporate earnings’ reports as well as outlook statements.
An important trigger for the rally was the bank, State Street, whose shares closed over nine per cent higher after it reported that its earnings for quarter two would beat analysts' forecasts.
But, what could have been seen as even better news, credit card delinquencies dropped to eight-year lows.
There was also positive news out of the UK and Europe with the likes of department store Marks & Spencer reporting better than expected sales.
Speculation over fact?
Against this, retailers were under pressure after low-end but popular store – Family Dollar – reported a nice rise in profit but tipped tougher conditions were prevailing and lying ahead.
This contrast of a good bank’s outlook against a weaker retail prediction on the strength of bellwether companies will be the feature of stock trading in coming weeks as second quarter earnings reports kick off.
Facts, unfortunately, could take a back seat to speculation, which has been the trend this year, with outlook statements taking precedence over the companies’ actual profit and sales reports.
If these can be more optimistic than the prevailing more negative views pushed by the bears and market opinion-makers recently, then rallies like Wall Street’s overnight could replace the big sell-offs we have seen since April.
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Published on: Thursday, July 08, 2010blog comments powered by Disqus