US open: IBM soars, pulls Dow Industrials past 23,000
Gains for Big Blue on the back of its latest quarterly numbers have pushed the Dow Industrials clear of the 23,000 point mark with investors very much focused on the steady stream of corporate results coming out.
At 1509 BST, the Dow Jones Industrial Average was ahead by 0.45% or 104.58 points at 23,102.22, with the S&P 500 up by 0.05% or 1.22 points to 2,560.58, while the Nasdaq Composite was drifting 0.05% or 3.33 points lower, changing hands at 6,620.33.
In parallel, shares of IBM were rocketing 8.71% - for their biggest one-day price move since January 2001.
Commenting on the fresh record highs on the Dow Industrials and S&P 500, Michael Hewson at CMC Markets UK said: "Looking back at previous instances of stretched valuations one of the common denominators on a historical basis has been a feeling of euphoria, a sentiment which is largely absent at this point in time.
"That's not to say investors are complacent, some undoubtedly are but when we've had substantial corrections on previous occasions the rotation of capital has always had an alternative destination to go to in terms of government bonds. These are nowhere near as attractive now, interest rates, and bond yields were much higher in 2007, 1997 and 1987, while today they are anchored to the floor, which limits investor options in terms of returns."
Against that backdrop, on Wednesday morning Dallas Fed chief Robert Kaplan sounded a 'dovish' note, reportedly saying that the so-called 'neutral' interest rate lay at about 2.5%, adding that there was potential for it to be lower due to declines in long-term GDP growth.
In other economic news, a key indicator of homebuidling activity in the States fell back for a third consecutive month in September, although some economists brushed off the data, saying they expected to see at least a partial rebound in coming months.
US housing starts fell by 4.7% month-on-month in September to reach an annualised pace of 1.127m, according to the Department of Commerce. That fell well short of the 1.18m pace of starts projected by economists.
Despite that weak print on housing, the yield on the benchmark 10-year US Treasury note was four basis points higher to 2.34%.
Back on the corporate side of things, also some observers were critical of the quality of IBM's earnings, arguing that they had much to do with the multinational's ability to dodge taxes, the fact was that its latest set of financials soundly beat forecasts from analysts on the Street.
For its third quarter, IBM posted earnings per share of $3.30 on adjusted basis (consensus: $2.84) on the back of $19.15bn in revenues (consensus: $18.61bn).
Also in the spotlight, chip-maker Micron Technologies announced plans to redeem $2.25bn of debt via recently raised funds and from cash on hand.
From a sector standpoint, the biggest gains were to be seen in Computer Services (4.19%), Industrial Suppliers (4.05%) and Coal (1.74%).
E-Bay and American Express were scheduled to update investors after the closing bell.