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Overnight Markets: US stocks advance as Fed upbeat on economy

by Himanshu Singh on May 01, 2014 at 05:16

Overnight Markets: US stocks advance as Fed upbeat on economy

Wall Street advanced on Wednesday, with the Dow Jones Industrial Average surging to a record, after the Federal Reserve said the economy is gaining momentum as it announced another cut to its massive bond-buying programme.

The Dow Jones rose 45 points or 0.27%, to 16,581, a record high close. It was the first record close of the year for the Dow. The S&P 500 gained six points or 0.3%, to 1,884 and the Nasdaq Composite added 11 points or 0.27%, to 4,115.

Investors shrugged off a data showing weak first-quarter economic growth, which was tied to the severe winter that hampered exports and hit investment spending. US gross domestic product grew at a 0.1% annualised rate from January through March, compared with a 2.6% gain in the prior quarter. Exports dropped and inventories climbed at a slower pace. Consumer spending on services rose by the most in 14 years.

The Fed said in a statement it would reduce its monthly bond purchases to $45 billion from $55 billion, as expected. That will keep it on track to end the programme as soon as October.

In company news, Pepco Holdings Inc. climbed 17% after Exelon Corp. agreed to buy it and Twitter Inc. (TWTR) dropped 8.6% after saying user growth slowed. EBay Inc. (EBAY) fell 5% as the biggest online marketplace forecast sales that trailed some analysts’ estimates. Exxon Mobil (XOM.N), up 0.9%, led gains on the S&P 500.

After the bell, shares of Yelp Inc (YELP.N), the operator of consumer review website Yelp.com, rose 4% as it reported a 66% rise in quarterly revenue.

The S&P commodities gauge had its worst day since 1 April. Nickel jumped 15% in April, the most since September 2012, on concern tensions between Russia and Ukraine will curb supply.

Arabica coffee touched a 26-month high last month as a drought in Brazil ravaged the crop. West Texas Intermediate crude prices dropped 1.8% in April, the most in five months.

In Asia, shares suffered on Thursday in late morning trade as data on China's vast manufacturing sector just missed forecasts, with holidays across much of the region muffling the impact.

Japan's Nikkei was up 0.4%, while Australian shares eased 0.4%. MSCI's broadest index of Asia-Pacific shares outside Japan barely budged.

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