Stock exchange traded funds (ETFs) were strong Wednesday, with most of the major indexes gaining more than 1% as a raft of solid earnings and outlooks bolstered optimism about future economic prospects.
- Nasdaq OMX Group (NasdaqGS: NDAQ), the exchange operator battling to buy out rival NYSE, showed few signs it was distracted from its core business as it logged record profit on the back of robust derivatives trading. Excluding one-time items, the company’s per-share profit was a record 61 cents per share, matching the average analyst estimate as compiled by Thomson Reuters I/B/E/S. Nasdaq this month joined with IntercontinentalExchange (NYSE: ICE) to bid for Big Board parent NYSE Euronext (NYSE: NYX), which earlier this year agreed to be acquired by Germany’s Deutsche Boerse AG. “The takeover battle didn’t appear to impact them whatsoever, they had a record quarter,” said Richard Repetto, analyst at Sandler O’Neil. “Almost all revenue lines increased, and they continue to see pretty big jumps in their data centers.” The Direxion Daily Financial Bull 3x Shares ETF (NYSEArca: FAS) is up 2% so far on Wednesday.
- Business investment in capital equipment has been one of the bright spots in a nearly 2-year-old economic recovery. A reading of the U.S. manufacturing sector by the Institute of Supply Management has indicated expansion for 20 consecutive months. But comparisons with a year ago are becoming harder as growth rates moderate. Analysts have noted industrial companies will put more emphasis on capital allocation strategies, including mergers and acquisitions, to drive the next stage of growth. The industrial sector has generally outperformed the broader market over the past year, with the Standard & Poor’s capital goods industry index up 13 percent, while the full S&P 500 has gained 9.5%. The Industrial Select Sector SPDR ETF (NYSEArca: XLI) gained 2%.
- Europe’s leading stock markets soared on Wednesday in the wake of solid US earnings, cementing their recovery after a slump at the start of the week when a key ratings downgrade shook investors. The Stoxx 50 index of leading Euro zone companies was up 2.09 percent at 2,917.26 points. European stocks extended their gains following a relatively successful debt auction by Spain, which paid a higher yield but kept interest payments on 10-year bonds below 5.5%. The sale also helped bolster the Euro against the dollar. The only market that failed to rally in Europe was Greece, where the ASE Composite fell 0.7% to 1,427.94 as debt worries continued to batter stocks. Shares of National Bank of Greece dropped 1.8%. The SPDR Euro Stoxx 50 Index ETF (NYSEArca: FEZ) surged 3% early Wednesday.
Gregory A. Clay contributed to this article.
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