Higher profits from Ford, others drive stocks up
By KEN SWEET
The associated Press | October 25,2013
World markets were mostly higher Thursday, buoyed by an improvement in China’s manufacturing, but Chinese shares fell amid jitters over tighter credit in the world’s second largest economy.
NEW YORK — The stock market moved higher Thursday, recovering from a loss the day before, as investors reacted to earnings gains from Ford, Southwest Airlines and others.
The Dow Jones industrial average rose 106 points, or 0.7 percent, to 15,519 as of 3:20 p.m. Eastern. The Standard & Poor’s 500 index was up six points, or 0.4 percent, to 1,752, roughly three points from the record high of 1,755.67 it reached on Tuesday.
The Nasdaq composite was up 23 points, or 0.6 percent, to 3,930.
It’s one of the busiest weeks on Wall Street for corporate earnings. Roughly a third of the S&P 500 will report results, including some of the world’s best-known companies.
Ford earned an adjusted profit of 45 cents per share — a record for the third quarter — as sales rose 12 percent to $36 billion. The Dearborn, Mich.-based automaker sold 1.5 million cars and trucks in the period, up 16 percent. Wall Street analysts had expected Ford to earn 37 cents per share, according to FactSet. Ford rose 32 cents, or 2 percent, to $17.85.
Southwest Airlines, the nation’s largest domestic air carrier, reported sharply higher earnings. Southwest said it had an adjusted profit of 34 cents per share, up from 13 cents a year ago. Southwest rose 57 cents, or 3.5 percent, to $16.98.
AT&T fell 55 cents, or 1.6 percent, to $34.73. The telecommunications company said late Wednesday it had an adjusted profit of 66 cents in the third quarter, a penny above analysts’ forecast, however revenue fell slightly short of what analysts expected.
After the closing bell, investors will have results from technology giants Amazon and Microsoft to work through.
For investors, this week has been a return to business as usual. Wall Street has been focused for weeks on what’s going on in Washington, with the government shutdown, the near-breach of the nation’s borrowing limit and questions about what’s next for the Federal Reserve’s massive bond-buying program.
So far, corporate earnings have come in pretty much as most money managers expected. Companies are reporting bigger profits, but most of the growth has come from cost-cutting, a trend that hasn’t changed very much since the financial crisis.
“We’re in a slow-growth economy and companies need to do everything to boost earnings,” said Brian Reynolds, chief market strategist at Rosenblatt Securities.
With the S&P 500 trading at record highs and corporations finding it difficult to increase their sales, several market watchers have said they aren’t sure how much further stocks can go from here.
There are also signs that stocks are getting expensive. Investors are currently paying more than $16 for every $1 of earnings in the S&P 500, up from $14 at the beginning of the year.
“We’re at this stage where we need to start to see the fundamentals improve,” said Quincy Krosby, a market strategist with Prudential Financial.