Strong earnings lifts Wall Street to new record

US share prices have climbed today, pushing the S&P 500 to a record high, on the strength of macroeconomic data and company earnings.

By early afternoon in New York, the S&P 500 was up 0.42% at 1846.6, after earlier reaching as high as 1849.45, which is a new intraday record for the index. The other leading stock indices have also risen, with the Dow up 0.72% or 118 points at 16,492 and the NASDAQ 100 gaining 0.73% to 3607.0.

US economic data of late has been painting a picture of increasing strength and the latest slew of earnings suggests companies have been thriving in this environment. Bank of America climbed 2.5% today after reporting fourth-quarter earnings that comfortably beat expectations. Earnings were several times greater than in the same quarter in 2012, when the company was hit by $5 billion of mortgage-related charges.

‘Capital and liquidity are at record levels, credit losses are at historic lows, our cost savings initiatives are on track and yielding significant savings, and our businesses are seeing good momentum,’ said CFO Bruce Thompson. The company’s peers JP Morgan and Wells Fargo both reported better-than-expected earnings yesterday.

The recent run of strong economic indicators continued today with a large jump in the New York Fed’s latest index of business conditions. The Empire State Manufacturing Survey climbed to 12.51this month, from an upwardly-revised 2.22 for December. New orders spiked from -1.69 to 10.98, signalling future strength.

Prices paid by wholesalers rose last month, with the Producer Price Index rising 0.4% month-on-month, for an annual change of 1.2%, which was in line with forecasts. The core rate, which excludes food and energy costs, rose 0.3%, above the 0.1% that had been expected. Along with the rise in prices paid reported in the Empire State Manufacturing Survey, this suggests that we may finally be starting to see inflation warming up.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.