US close: Shares and Treasuries sent higher by BoJ decision
US stocks gained on Friday after the Bank of Japan’s surprise decision to introduce negative interests for the first time gave equities and the Treasury market a shot in the arm.
The Dow Jones Industrial Average jumped 2.47% or 396 points to 16,466, the Nasdaq another 2.38% to 4,614 and the S&P 500 climbed 2.46% to finish at 1,940.
Yields on the benchmark 10-year US Treasury note retreated by six basis point to 1.92%.
The Bank of Japan decided to introduce a negative interest rate of -0.1% for new commercial banks' current account deposits. It means the banks will be charged by the BoJ for some deposits and hopefully encourage them to use reserves to lend to businesses.
Japan´s rate-setters said the rate could be extended further into negative territory in future.
Back in the US, investors seemed to shrug off data showing a worse-than-expected slowdown in gross domestic product in the fourth quarter. US growth eased to an annualised rate of 0.7% from 2% in the third quarter, preliminary data from the Commerce Department revealed.
Dennis de Jong, managing director at UFX.com, said: “The outlook was pretty bright for the Federal Reserve when it raised interest rates for the first time in nearly a decade in December. It’s most definitely gloomier now.
“GDP often goes through peaks and troughs, so it would be alarmist to suggest today’s data is the start of something more serious. That said, it pushes another rate hike in March into the very unlikely bracket.”
Meanwhile, oil prices were sitting higher on hopes OPEC and Russia might reach a deal on cutting production to address the supply glut.
In other macroeconomic news, the Chicago Purchasing Managers’ index rose to 55.6 in January from 42.9 the previous month.
The data, released by the Institute for Supply Management, comfortably beat economists’ expectations for a reading of 45.3 and marked the highest pace of growth in a year.
Fed official sounds dovish note
In an interview with Reuters, the president of the Federal Reserve bank of Dallas, Robert Kaplan, said the omission from the Fed´s policy statement on 27 January of the phrase that economic risks were "balanced" was significant.
"That is significant. And it should be saying to people (that) we are going to take some time here to understand what is going on," he said.
"I need more time to continue to assess that and I plan to take it."
Amazon pummelled after earnings miss
In company news, Amazon’s shares fell sharply after the on-line marketplace reported its largest quarterly profit ever, but still fell short of analysts' expectations.
Microsoft jumped after it reported second quarter revenue of $23.8bn, above estimates.
Visa shares edged higher after the credit card company reported first quarter earnings of $1.7bn late on Thursday.
Rival MasterCard slumped despite reporting an 11.1% increase in quarterly profit as purchase volumes rose.
From a sector stand-point, the best performance was seen in the following industrial groups: Coal (17.63%), Consumer elctronics (7.87%) and Iron&Steel (6.21%).
S&P 500 - Risers
CONSOL Energy Inc. (CNX) $7.94 +17.63%
Micron Technology Inc. (MU) $11.03 +11.58%
Peabody Energy Corp. (BTU) $4.45 +11.25%
Seagate Technology Plc (STX) $29.05 +8.58%
Qorvo, Inc. (QRVO) $39.60 +7.99%
Harman International Industries Inc. (HAR) $74.39 +7.80%
Visa Inc. (V) $74.49 +7.44%
Chesapeake Energy Corp. (CHK) $3.39 +7.28%
State Street Corp. (STT) $55.73 +7.21%
Cabot Oil & Gas Corp. (COG) $20.75 +7.01%
S&P 500 - Fallers
Amazon.Com Inc. (AMZN) $587.00 -7.61%
Electronic Arts Inc. (EA) $64.54 -7.52%
Gilead Sciences Inc. (GILD) $83.00 -5.18%
Eastman Chemical Co. (EMN) $61.21 -2.93%
Netflix Inc. (NFLX) $91.84 -2.72%
Vertex Pharmaceuticals Inc. (VRTX) $90.75 -2.17%
VeriSign Inc. (VRSN) $75.60 -1.92%
AbbVie Inc (ABBV) $54.90 -1.70%
Monster Beverage Corp (MNST) $135.03 -1.58%
AGL Resources Inc. (GAS) $63.56 -1.30%
Dow Jones I.A - Risers
Visa Inc. (V) $74.49 +7.44%
Microsoft Corp. (MSFT) $55.09 +5.83%
JP Morgan Chase & Co. (JPM) $59.50 +3.88%
Intel Corp. (INTC) $31.02 +3.50%
Apple Inc. (AAPL) $97.34 +3.45%
Unitedhealth Group Inc. (UNH) $115.16 +3.39%
Wal-Mart Stores Inc. (WMT) $66.36 +3.33%
General Electric Co. (GE) $29.10 +3.15%
Merck & Co. Inc. (MRK) $50.67 +2.99%
Cisco Systems Inc. (CSCO) $23.79 +2.96%
Dow Jones I.A - Fallers
Nasdaq 100 - Risers
Micron Technology Inc. (MU) $11.03 +11.58%
Seagate Technology Plc (STX) $29.05 +8.58%
Norwegian Cruise Line Holdings Ltd. - Ordinary Shares (NCLH) $45.37 +6.85%
Nxp Semiconductors Nv (NXPI) $74.78 +6.40%
Skyworks Solutions Inc. (SWKS) $68.92 +6.37%
Vimpelcom Ltd Ads (VIP) $3.29 +6.13%
Microsoft Corp. (MSFT) $55.09 +5.83%
Applied Materials Inc. (AMAT) $17.65 +5.82%
Avago Technologies Ltd. (AVGO) $133.71 +5.81%
Adobe Systems Inc. (ADBE) $89.13 +5.45%
Nasdaq 100 - Fallers
Amazon.Com Inc. (AMZN) $587.00 -7.61%
Electronic Arts Inc. (EA) $64.54 -7.52%
Gilead Sciences Inc. (GILD) $83.00 -5.18%
Netflix Inc. (NFLX) $91.84 -2.72%
Vertex Pharmaceuticals Inc. (VRTX) $90.75 -2.17%
Monster Beverage Corp (MNST) $135.03 -1.58%
TripAdvisor Inc. (TRIP) $66.76 -0.83%