Global Stocks Slightly Higher Amid Earnings Reports

By Leslie Josephs 

        Global stocks rose slightly Friday as paltry growth in U.S. wages cast some doubt over whether the Federal Reserve would raise interest rates in the coming months.
        U.S. indexes rebounded from slight losses earlier. The Dow Jones Industrial Average rose 16.9 points, or 0.1%, to 17763, while the S&P 500 edged up nearly 4.2 points, or 0.2%, to 2112.70.
        The Nasdaq Composite Index gained 20.9 points, or 0.4%, to 5150.16.
        On the other side of the Atlantic, the Stoxx Europe 600 rose less than 0.1% to 396.37.
        The U.S. employment-cost index, a measure of workers' wages and benefits, rose a seasonally adjusted 0.2% in the second quarter from the first quarter, the Labor Department reported Friday. The gains marked the smallest quarterly rise since record-keeping began in 1982, and fell below economists' expectations of a 0.6% increase. The quarterly measure of U.S. labor costs indicated stagnated wages, casting some doubt on the Federal Reserve's plans to raise rates in the coming months.
        "I think what the markets are reading is that once again this another one in the column for "no" in September," said Jeffrey Yu, head of single-stock derivatives trading at UBS AG.
        Even if the Fed were to raise rates by a quarter percentage point, it wouldn't likely encourage investors to sell stocks and pile into other asset classes like bonds, said Gordon Charlop, managing director at Rosenblatt Securities.
        "What does a quarter [percentage] point do? Does it mean I'm going to sell all my equities? I don't think so," Mr. Charlop said. "It's like jumping off a snake's belly."
        Major oil producers' downbeat earnings reports limited indexes' gains as the results added to concerns about the long-term impact over the yearlong decline in crude prices.
        Exxon Mobil Corp., the biggest U.S. oil company, reported a 52% drop in profit for its second quarter. Shares were down 3.3% at $80.30.
        Chevron shares were 3.7% lower at $89.55 after it reported $2.6 billion in charges in its quarterly statement tied to lower oil prices.
        "That should not surprise anyone," Randy Frederick, managing director of trading and derivatives at Charles Schwab, said of the oil companies' results.
        Nymex oil prices fell 50% over the past 12 months. U.S. oil futures were recently down 1.9% at $48.62 a barrel.
        Shares of Coca-Cola Enterprises Inc. rallied 13.3% at $51.48 following news of merger talks with Coke bottlers Coca-Cola Iberian Partners and Germany's Coca-Cola Erfrischungsgetranke AG.
        Shares of Hanesbrands Inc. dropped 10.68% to $30.50 after the apparel maker posted second-quarter sales below analyst estimates
        Shares in Airbus Group climbed after the plane maker reported a rise in second-quarter profit. French bank BNP Paribas and chemical company Arkema both rose after better-than-expected results. Steel pipe maker Vallourec fell after reporting a loss for the first half of the year.
        Among companies on the Stoxx Europe 600 that have so far reported second-quarter results, 54% have exceeded profit expectations, according to FactSet data. That compares with 50% in the first quarter.
        "The earnings season in Europe has been pretty good," said Christian Stocker, an analyst at UniCredit. Concerns over the Chinese economy are likely to remain and could hold back shares in mining companies and car makers in the coming months, he said.
        Shares in the U.S. and Europe had fallen sharply at the start of the week as a slump in Chinese equities spilled over into global markets, but they have since more than recovered those losses as investors turned to corporate earnings and clues on the timing of a Federal Reserve rate increase.
        The dollar weakened 0.9% against the euro, as one euro bought $1.1025 versus $1.0933 on Thursday. Currency markets have gyrated in recent months amid an uncertain outlook for U.S. and global growth, as well as questions about whether the Fed will raise the short-term benchmark interest rate in September. Higher interest rates would make the dollar a more alluring investment to investors.
        Gold prices were recently up 0.6% at $1,095.50 a troy ounce on the Comex division of the New York Mercantile Exchange. A weaker dollar lent support to the precious metal, which is priced in dollars and becomes less expensive for investors using stronger currencies. Still, gold is on track to post a 6.5% monthly loss in July, the worst drop since April 2013.
        Tommy Stubbington and James Ramage contributed to this article.
        Write to Leslie Josephs at leslie.josephs@wsj.com
        (END) Dow Jones Newswires

        July 31, 2015 13:07 ET (17:07 GMT)

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