Its breakfast in America! Stocks posted strong gains as economic news and a batch of fresh earnings reports cheered investors. The Dow was up 320 points on heavy volume to close at 17,489.
McDonalds posted stronger than expected sales and earnings as the rollout of the 24/7 all-day breakfast seems to be working. Overall sales were down 5% but adjusted for currency swings McDonald’s said sales would have been up 7%. Net income came in well above estimates rising 28%. Turnaround efforts are fielding fruit sooner than expected as US same store sales went positive for the first time in 2 year. Sales in China were also strong rising 26.8%. Shares were higher on the report proving that happy meals can make people happy.
Caterpillar reported earnings that missed estimates as a strong dollar and global weakness in mining wreaked havoc with sales and margins. The company posted a 39% drop in net income and also lowered forward guidance saying it will continue to reduce capacity well into 2016. Shares were higher on the news as some gurus saw crumbs of comfort hidden in the report.
In economic reports housing continues to do well as the FHFA House Price index rose three tenths of a point and the September existing home sales were up 4.7% to 5.55 million. While eating an egg McMuffin for lunch, Art “Colonel” Hogan, Chief Market thinker at Wunderlich Securities issued a hopeful belch about how the housing market continues to recover and add to the economy.