Investors were all smiles on Wall Street today, as the major indices enjoyed one of their best days of the year. The European Central Bank (ECB) kept interest rates unchanged, but left open the door to further easing if necessary.
In addition, earnings reports of a number of major U.S. companies were reported with several upside surprises, as well as a few disappointments.
On the economic front, the Labor Department reported that weekly jobless claims came in at 259,000, which was less than the 265,000 the street was expecting. That made a number of traders happy.
In addition, the FHFA House Price index was up 0.3% in August, and September existing home sales were 4.7% higher in September to an adjusted annual rate of 5.55 million. The national median home price of $221,900 was up 6.1% from one year ago.
The Dow Jones Industrial Average bolted up 1.8%, while the S&P 500 and the Nasdaq both rose 1.7%. All sectors except health care were higher today, with a big day from the Basic Materials and Industrial stocks.
Good earnings drove several stocks higher, such as McDonald’s Corporation (NYSE:MCD), Dow Chemical Co (NYSE:DOW) and Southwest Airlines Co (NYSE:LUV). Those three finished among today’s best stocks.
McDonald’s Corporation (MCD)
MCD stock gapped up 8% to hit an all-time high after reporting third-quarter earnings of $1.40 per share, easily besting the Zacks Consensus Estimate for $1.27 per share.
In addition, the fast food giant easily beat the estimates on revenue, coming in with $6.62 billion to best the street view of $6.44 billion.
This was a nice turnaround quarter for McDonald’s, after several disappointing quarters in a row. The company noted that global comps grew 4% — a vast improvement over the second quarter’s 0.7% decline.
Dow Chemical Co (DOW)
Not to be outdone, Dow Chemical also had an outstanding third quarter to report on today. Dow earned $1.09 per share, a 51% jump over a year ago. That number included the one-time $621 million profit from the sale of its AgroFresh specialty chemical business.
Excluding that sale, EPS of 82 cents per share beat the Zacks Consensus Estimates for 68 cents per share — the eighth consecutive quarter that Dow Chemical has beaten earnings estimates. However, revenue of $12.036 billion was shy of the estimate for $12.252 billion.
Another impetus for the price rise of 5% today was the company announcing a 10% raise in its dividend.
Southwest Airlines Co (LUV)
Southwest Airlines was another company whose third-quarter earnings surpassed the estimates today. LUV stock was up more than 7% after reporting earnings of 94 cents per share — two cents better than analysts’ estimates.
In addition, Southwest reported revenue of $5.318 billion, nicely above the consensus estimate for $5.102 billion.
Lower fuel costs were one reason given for the better-than-expected performance. LUV stock has been a 34% gainer since this past July, as oil prices have declined. Investors have to “LUV” a stock like that.
As of this writing, Ethan Roberts does not hold a position in any of the aforementioned securities.
