U.S. Stocks Open Higher After Retailers Post Resilient Earnings

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U.S. stocks opened higher Wednesday, as investors weighed the prospects for a global economic recovery in the wake of the coronavirus pandemic.

The Dow Jones Industrial Average rose 307 points, or 1.2%, to 24514 shortly after the opening bell. The S&P 500 climbed 1.3% and the Nasdaq Composite gained 1.4%.

Investors are eyeing the latest batch of earnings. Lowe's shares jumped 3.2% after it reported sales and profit significantly above expectations, although the company withdrew guidance for 2020. Target fell 0.7% after the retailer beat estimates on sales growth, but said its earnings per share fell by nearly two thirds versus the comparable period last year.

"There's a consensus around the fact that companies can adapt [to the pandemic], but at the expense of slightly higher costs," said Michael Hewson, chief market analyst at brokerage CMC Markets.

"There's still broad optimism that central banks can hold the line and hopefully put a floor under equity markets," he added.

The rebound in stocks globally has been more pronounced in the U.S. where tech giants have pulled indexes higher, said Sebastian Mackay, a multiasset fund manager at Invesco.

"It's been a fairly narrowly-driven rebound in the [U.S.] market, if you look at the European market or some of Asia, the rebound looks much less impressive," he said.

The pan-continental Stoxx Europe 600 drifted up 0.3%.

In Asia, Japan's Nikkei 225 and Korea's Kospi Composite rose 0.8% and 0.5%, respectively. Hong Kong's Hang Seng was little changed, sliding less than 0.1%, while Australia's S&P/ASX 200 rose 0.2%, reversing earlier losses. The Shanghai Composite declined 0.5%.

European trading followed a familiar pandemic trading pattern Wednesday. Aerospace, travel and banking stocks were off the most, while health care and tech stocks were mostly stronger.

Credit score provider Experian led European stocks higher after reporting earnings that were seen as resilient in the face of the coronavirus shutdown. Its shares are now up on the year.

U.K. retailer Marks and Spencer rose after its earnings release showed that its quick reaction to the pandemic had paid off, including canceling summer fashion orders and ramping up its food sales business. Adjusted pretax profit fell to GBP403 million ($494 million), only slightly lower than expectations.

U.K. inflation data released Wednesday showed that the headline figure fell to 0.8% in April from 1.5% a year earlier.

"This now means the inflation figure is outside the Bank of England's mandate and raises the prospect of further quantitative easing," said Robert Scammell, a portfolio manager at Kempen Capital Management.

The Federal Reserve will release minutes at 2 p.m. ET from its April 28-29 policy meeting, when officials pledged to use a full range of tools to support the U.S. economy but didn't introduce new measures. This is expected to provide further clues on the possibility of negative rates in the U.S., according to Mr. Hewson.

West Texas Intermediate futures, the main gauge for U.S. crude oil prices, rose 2.6% to $32.79 a barrel ahead of a report from the U.S. Energy Information Administration that will show the weekly change in oil stocks. Global benchmark Brent crude rose 3% to $35.71 a barrel.

The yield on the 10-year U.S. Treasury note fell to 0.705% from 0.711% Tuesday. Bond prices rise as yields fall.

 

[Pitta]