Strong earnings push stocks to record highs
Tech and healthcare companies helped push stocks up on Wall Street on Tuesday, pushing major indexes to new highs.
The Standard & Poor’s 500 index rose 0.2% to its second all-time high in two days. The Dow Jones industrial average rose less than 0.1%, enough for its third consecutive record. The Nasdaq composite also gained less than 0.1%.
Trading was choppy and lost momentum towards the end of the day as investors continued to examine mostly strong corporate earnings and encouraging reports on consumer confidence and new home sales in the US. United.
Strong earnings reports have helped several large companies rise to the challenge. United Parcel Service jumped 6.9% for the S&P 500’s biggest gain, as higher shipping rates helped the parcel service easily beat analysts’ third-quarter profit forecasts. Hasbro rose 3.2% after the maker of Transformers, My Little Pony and other toys reported strong financial results.
Stocks rose broadly, with companies releasing much stronger summer earnings reports than analysts had expected.
“Right now, valuations are high and the market needs reassurance with corporate earnings,” said Ernesto Ramos, director of US investments for BMO Global Asset Management. “There is still a lot of risk, but the market is currently focusing on the right things.”
The S&P 500 gained 8.31 points to 4,574.79. The core index has posted three consecutive weekly gains and leads the other major indexes with a gain of 21.8% this year. The Dow Jones added 15.73 points to 35,756.88, while the Nasdaq rose 9.01 points to 15,235.71.
Small business stocks fell. The Russell 2000 Index lost 16.56 points, or 0.7%, to 2,296.08.
Tech stocks have done a lot of the heavy lifting for the broader market. Chipmaker Nvidia led the way with a 6.7% gain. Equities in the health care sector and a range of companies that depend on consumer spending for goods and services also posted strong gains. UnitedHealth Group rose 1.2% and Amazon.com 1.7%.
Only communications and industrials fell. Facebook slipped 3.9% after giving investors weak sales forecasts. The company also faces a close scrutiny of its seemingly lax regulation of harmful and misleading information on its platform.
Bond yields were mixed. The 10-year Treasury yield slipped to 1.61% from 1.63% on Monday night.
Investors received several encouraging economic updates on Tuesday. U.S. consumer confidence rose in October after three straight declines, as public anxiety over the Delta variant of the coronavirus appeared to have eased. New home sales jumped 14% in September to the fastest pace in six months, as strong demand helped offset higher prices.
The wider market has also welcomed signals that big spending plans in Washington and potential tax hikes for businesses are likely to be watered down, Ramos said.
Wall Street is still concerned about the impact supply chain issues will have on a wide range of industries. Many companies have already warned of increasing costs of reducing operations.
Paint maker Sherwin-Williams rose 2% even though its latest results showed higher raw material costs weighed on its finances.
European markets ended higher, while Asian markets closed mixed.
Investors still have a busy week of corporate earnings ahead. Aircraft maker Boeing and beverage company Coca-Cola will release their results on Wednesday.
General Motors and Ford will also release their results on Wednesday. The reports could help give investors a clearer picture of how the auto industry is handling supply chain issues, including a chip shortage that has weighed on auto production.
Apple and Amazon will release their financial results on Thursday. The companies, along with Microsoft and Google, are the four biggest companies on Wall Street in terms of market value and their stock movements have a huge effect on the S&P 500.