U.S. equity markets were solidly higher on Wednesday as focus turned to corporate news and energy names got a boost from higher oil prices.
As of 9:30 a.m. ET, the Dow Jones Industrial Average was up 102 points, or 0.61% to 16893. The S&P 500 gained 11 points, or 0.57% to 1990, while the Nasdaq Composite climbed 24 points, or 0.51% to 4772.
Telecommunications was the only sector in negative territory, while energy helped lead the other nine sectors in advancement.
Wall Street was higher despite a lackluster end to the previous trading day, and a barrage of disappointing earnings from Yum Brands (YUM) and an unexpected downward revision to Adobe’s (ADBE) full-year outlook.
Larry Shover, chief investment officer at Solutions Funds Group, said there are two keys to sustaining the recent rally in the equity markets: Decent economic data out of China, and solid corporate earnings.
China markets have been closed for a week due to the Golden Holiday, however there’s been a rebound in China, emerging markets, and commodities so far this month and Shover said the upward trend will continue if China’s September data pace is sustained.
“For earnings, the headlines were more mixed – Yum and NuSkin were definitely ‘bad’ but the Adobe guide cut had more to do with FX and its subscription transition (vs. poor demand),” Shover said. “It is still way too early in the Q3 season to draw any firm conclusions.”
Earnings continued to trickle out ahead of the opening bell in the U.S. Constellation Brands (STZ) saw a better-than-forecast profit thanks to higher sales of its Corona and Modelo brands. The company also raised its full-year profit outlook, which helped send shares higher.
Monsanto (MON) saw a bigger-than-expected quarterly loss thanks to weakness in the commodity market. However, the world’s largest seed and agrichemical company set expectations that its results will be pressured well into next year.
Overnight, Samsung said it expects to see a jump in its quarterly profit – an 80% increase from the year prior to $6.3 billion. The news sent the company’s shares surging.
With no economic data on tap, investors focused on global M&A as markets rallied overseas. British-South African brewing company SAB Miller quickly dismissed a revised takeover bid from Belgium-based Anheuser-Busch InBev (BUD). The proposed $104 billion deal, a 44% premium to SABMiller’s September 14 closing price, “very substantially undervalues,” the company said.
European equity markets rallied as the Euro Stoxx 50, which tracks large-cap companies in the eurozone, jumped 0.92%. The German Dax climbed 1.20%, while the French CAC 40 rose 0.90%, and the UK’s FTSE 100 gained 0.67%.
In commodities, global crude prices continued to climb higher on expectations global production could begin falling more sharply. That would help push prices back up after a significant decline over the last year and a half. U.S. crude rose 1.26% in recent action to $49.12 a barrel, while Brent, the international benchmark, rose 1.35% to $52.62 a barrel.
Metals were mixed as gold traded along the flat line at $1,145 a troy ounce, while silver declined 0.53% to $15.90 an ounce. Copper, meanwhile, jumped 1.21% to $2.38 a pound.
The Fed might have been out of the market’s sight, but not out of mind on Wednesday. Investors awaited the central bank’s September FOMC minutes, set for release Thursday afternoon. The meeting minutes will give Wall Street a clearer picture of what voting members debated before they decided to hold off on hiking short-term interest rates from historic lows at the meeting.
In recent action, the yield on the 10-year U.S. Treasury bond rose 0.037 percentage point to 2.074%