Sun, Jan 22, 2012 - Page 10 News List

US shares rebound in absence of bad Europe news

AFP, NEW YORK

Generally strong earnings delivered solid gains of more than 2 percent for US markets in a holiday-shortened week, helped by the absence of bad news from Europe.

US investors focused on relatively positive domestic economic data and fourth quarter earnings reports, to mark the best weekly gains of the year so far.

“It’s been a strong week, pretty much based on the fact there wasn’t any bad news out of Europe,” said Mace Blicksilver of Marblehead Asset Management.

“The individual earning reports, by and large, were great reports, although Google was weaker. But still, IBM is much more representative of the economy than Google is.”

The Dow Jones Industrial Index of blue chips jumped a third straight day on Friday on the back of strong earnings from Microsoft, Intel and IBM, to drive the gain for the four-day week to 2.4 percent.

The S&P 500 added 2.0 percent while the NASDAQ, despite being pulled down on Friday by Google’s disappointing quarterly results, racked up a 2.8 percent jump for the week.

“US markets were more interested in domestic developments, particularly positive employment and manufacturing data and generally upbeat earnings results from S&P 500 companies — major banks notwithstanding,” said Paul Edelstein at IHS Global Insight.

“Double-dip recession fears are shrinking in the rear-view mirror as it becomes increasingly evident that the US recovery will endure, if not necessarily flourish.”

For the coming week attention will be split between the eurozone and a bucket-load of domestic US events, including the US Federal Reserve’s policy meeting, US President Barack Obama’s State of the Union address on Tuesday and GDP figures.

The president’s annual address to the US Congress is expected to touch heavily on the economy, which has been a key issue in this year’s US election campaign.

On Tuesday and Wednesday the Federal Reserve’s Federal Open Market Committee will likely consider more stimulus for the US economy, via bond purchases.

On Friday the government will release its first estimate of fourth-quarter growth.

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