US stocks closed higher on Wednesday, lifted by solid earnings from bank Morgan Stanley (NYSE:MS) and oil services provider Halliburton (NYSE:HAL) as well as a jump by oil prices in the wake of shrinking inventories in the world’s biggest economy.
The S&P 500 market bellwether ended up 0.2% at 2144 while the US oil benchmark West Texas Intermediate was up 2.3% to $51.43. Earlier, it hit just shy of $52 – a 15 month high.
EIA data showed a slump in US oil inventories.
After the bell, American Express (NYSE:AXP) climbed 5.3% to $64.49 following a third quarter beat and increased its 2016 profit guidance.
The New York-based company said it now expects adjusted earnings per share, which exclude certain items, to clock in between $5.90 – $6 in 2016, from its earlier expectations that it would fall on the high end of a $5.40 – $5.70 range.
It was less good news for online marketplace, EBay (NASDAQ:EBAY) whose shares came under pressure after hours, down 6.9% to $30.27 after revealing a disappointing earnings outlook.
The company said it expects fourth quarter revenues to be between $2.36bn to $2.41bn, compared with Wall Street expectations of $2.4bn.
Toy maker Mattel’s (NASDAQ:MAT) efforts to revive Barbie purchases appear to be paying off as sales of the doll climbed for the second successive quarter, helping lift shares after the bell by 4.5% to $32. But the company still missed earnings estimates. California-based Mattel said sales of its Barbie dolls jumped 17% to $350mln in the third quarter from a year ago.
Tesla Motors (NASDAQ:TSLA) shares had a good run, up 2.2% to $203.56, but thanks to hype and no news. Chairman Elon Musk tweeted that a significant and surprising announcement will be made on Wednesday. That will be a t 9pm Pacific Time.
Early trading
US stocks rose on Wednesday, as a slew of bullish earnings reports from the likes of oil services group Halliburton (NYSE:HAL) and bank Morgan Stanley (NYSE:MS) were joined by oil prices at 15-month highs after an expected drop in US crude inventories.
US oil jumped 3.1% to $51.87 on Wednesday – its highest since mid-July 2015 - as measured by the US benchmark West Texas Intermediate future.
The US Energy Department said oil inventories unexpectedly fell last week in the latest sign that the glut in supply may be slowly easing.
The S&P 500 market bellwether was up 0.3% at 2145 and led by oil groups Transocean Inc (NYSE:RIG) up 5.8% to $10.47 and Halliburton (NYSE:HAL) up 5.4% to $49.63.
It was also good news for Morgan Stanley, whose figures kept up the momentum of earlier reports this week from the likes of JP Morgan (NYSE:JPM) and Bank of America (NYSE:BAC).
In fact, after underperforming for most of the year financials are having their time in the sun in October so far. Better than expected earnings from major US banks has helped the S&P 500 financials sector clock a 2.8% gain. And just to rub it in, it is the only major sector on the benchmark index to be in the black this month.
That said, the oil sector might challenge the banks if the current trend persists to an official oil supply cut by OPEC and Russia next month. For kingpin Saudi Arabia there is a strong motivation to do so. Read more.
The S&P Midcap 400 was up 0.3% to 1530 and led higher by a raft of oil stocks such as Superior Energy Services (NYSE:SPN) up 6.1% to $19.17 and Wpx Energy (NYSE:WPX) up 5.3% to $13.05. Right behind them were Denbury Resources (NYSE:DNR) and Diamond Offshore Drilling (NYSE:DO).
The S&P Smallcap 600 gained more modestly, by 0.06%, to 737 and led by Banc of California Inc (NYSE:BANC) up 19% to $13.41 after reporting record third quarter earnings.
Pre-Open
US stocks are indicated opening firmer on Wednesday helped by earnings before the bell from oil services group Halliburton (NYSE:HAL) and bank Morgan Stanley (NYSE:MS).
Halliburton reported profits that were stronger than expected, with earnings per share of 1 cent in the third quarter, when analysts had been forecasting a small loss. Halliburton shares were 1.6% higher at $47.82 before the bell.
But bourses have been lukewarm overnight after the pace of China’s economic growth rate – at 6.7% - was questioned by some economists in the West.
Morgan Stanley has wrapped up a generally positive earnings season for the big US banks, posting a 62 per cent increase in net income thanks to a strong showing from its trading arm. Shares were 1.4% at $32.76 pre-market.
Meanwhile, a sharp rise in the number of homeowners taking advantage of the low interest rates environment to refinance their mortgage has helped US Bancorp (NYSE:USB) deliver better than expected earnings for the third quarter.
Earlier, the world’s second-biggest economy reported third quarter growth which was exactly the same as in quarters one and two, leaving some to question its accuracy.
But the market is not a place to dwell and be profound so investors are already looking towards Tesla Motors (NASDAQ:TSLA) set to make a highly anticipated product announcement on Wednesday. Chairman Elon Musk said in a tweet that the product was "unexpected by most."
Tesla shares were up 0.5% at $200 pre-market.
Meanwhile, American Express (NYSE:AXP), Kinder Morgan (NYSE:KMI), eBay (NASDAQ:EBAY), and Mattel (NASDAQ:MAT) will report after the market closes. Both Kinder and eBay were 1% ahead pre-market.
Shares in Intel (INTC) dropped by 5% ay $35.85 pre-market as investors react to its latest earnings, which came out after the bell Tuesday.
On the economic front, the US Energy Information Administration will report weekly crude oil inventory data at 10:30 a.m. (1430 GMT). The Federal Reserve will release its Beige Book for October at 2 p.m (1800 GMT).