ASX opens 0.3% higher; energy stocks jump on higher oil prices

Wall Street added to its recent gains on Friday (US time) as stocks closed higher, driving the S&P 500 to its best week since July.

The S&P 500 rose 0.7 per cent for its third straight gain and ended the week 1.8 per cent higher. The Dow Jones Industrial Average rose 1.1 per cent and the Nasdaq composite gained 0.5 per cent. The Australian sharemarket is poised for a positive start with futures pointing to a rise of 31 points, or 0.4 per cent, at the open.

The latest Wall Street rally came as investors welcomed encouraging quarterly report cards from several companies. Leading the way for the S&P 500 was freight deliverer J.B. Hunt Transport Services, which jumped 8.7 per cent after reporting stronger profits for the summer than Wall Street expected. Goldman Sachs rose 3.8 per cent and Alcoa surged 15.2 per cent after it beat earnings expectations and announced a dividend payment and buyback of its stock.

The positive company earnings dove-tailed with a report showing people spent much more at US retailers last month than Wall Street expected. Sales at stores, restaurants and other retail establishments rose 0.7 per cent from August instead of falling, as economists forecast.

“We saw retail sales this morning come in pretty strong,” said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. “(Stocks) are still at pretty reasonable valuations with another earnings season having just ticked on, and thus far at least, some pretty good results.”

The S&P 500 rose 33.11 points to 4,471.37. The Dow gained 382.20 points to 35,294.76, and the Nasdaq rose 73.91 points to 14,897.34.

Friday’s gain follows up on a 1.7 per cent jump for the S&P 500 on Thursday, its best day since March, which was driven by stronger-than-expected earnings reports and encouraging data on the job market.

It’s a turnaround from a shaky few weeks, when the benchmark index fell as much as 5.2 per cent from its record set on September 2. Worries about stubbornly high inflation, reduced support for markets from the Federal Reserve and a slowing economy helped to knock stock prices around. The S&P 500 is back within 1.5 per cent of its all-time high.

Earnings reporting season has just begun, but early indicators are encouraging. All but one of the 19 companies in the S&P 500 that reported quarterly results this week topped analysts’ profit forecasts. Such strength is crucial after climbing interest rates heightened worries that stock prices had grown too expensive relative to profits.

Read the full Wall Street wrap here

AP