Sun, Jul 20, 2014 - Page 15 News List

US stocks rise as earnings, deals offset crises overseas

IMPERVIOUS INDICES:After plunging on Thursday, when a passenger jet was downed in Ukraine and Israel attacked Gaza, the market rallied the next day on signs of recovery

AFP, NEW YORK

A wave of corporate deals and generally positive quarterly earnings competed with gloomy news developments in Ukraine and Gaza for attention this week, but ultimately prevailed to lead US stocks higher.

For the week, the Dow Jones Industrial Average gained 156.37 points (0.92 percent) to finish on 17,100.18, while the broad-based S&P 500 rose 10.65 (0.54 percent) to 1,978.22 points and the tech-rich NASDAQ Composite Index added 16.66 (0.38 percent) to end at 4,432.15.

The week’s gains came despite twin crises that emerged on Thursday when a Malaysia Air jet carrying 298 people crashed in Ukraine in a disaster that US officials say was likely caused by a missile shot from an area of Ukraine controlled by pro-Russia separatists.

Only hours after the plane crashed, Israel launched a ground operation in Gaza, lifting the Palestinian death toll to 296 on Friday, the 11th day of assault that Israel argues is needed to counter Hamas’ “terrorist efforts.”

US stocks nose-dived on Thursday, but surged the next day even as the US sharpened criticism of Russia’s actions in Ukraine and as Israel warned of a wider Gaza assault.

“The negativity is being shrugged off for the most part,” said Michael James, managing director of equity trading at Wedbush Securities, adding that the market is showing “tremendous amounts of resilience.”

“Investors are continuing to embrace risk and buy every dip,” Kjolen Capital Management portfolio manager David Levy said.

The market is giving greater weight to positive economic news than to geopolitical threats like Ukraine, where the economic implications are murky and there is little obvious potential for a “prolonged impact on corporate America,” according to Levy.

“The economy is continuing to show signs of improvement,” Levy said. “We’re seeing strong corporate profitability, as well as strong merger and acquisition activity. That’s why the market is able to shrug off geopolitical news.”

Major deals this week included a plan unveiled by US tobacco giant Reynolds American Inc to acquire rival Lorillard Tobacco Co for US$27.4 billion and sell cigarette brands including Salem and Winston to British firm Imperial Tobacco Group PLC for $7.1 billion.

In other deals, US pharmaceutical giant AbbVie sealed a US$54 billion takeover of Dublin-based Shire Pharmaceuticals PLC, which had opposed earlier bids, Whiting Petroleum Corp announced plans to acquire Kodiak Oil & Gas Corp for US$6 billion and Abbott Laboratories sold its branded generic drugs for developed markets to generic drugmaker Mylan Laboratories Inc for stock valued at US$5.3 billion.

Rupert Murdoch rocked the media world when his entertainment company, Twenty-First Century Fox Inc, offered US$80 billion for Time Warner Inc. Time Warner turned down the bid, but Murdoch is “determined to buy Time Warner,” a person familiar with the matter said.

Technology giants IBM Corp and Apple Inc, while avoiding show-stopping mergers, announced what they called a “landmark” partnership to collaborate on applications for Apple’s iOS system, which will employ IBM’s supercomputing analytics.

Analysts were also smiling at the early results from earnings season.

Standouts included Dow component Intel Corp, which raised its profit forecast and announced US$20 billion in additional share repurchases; Google Inc, which notched a 22 percent increase in revenue behind a surge in “paid clicks;” and Goldman Sachs, which reported US$4.10 per share in earnings, beating expectations by more than US$1.

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