U.S. stocks are maintaining Tuesday gains, buoyed by stronger than expected results from several blue chip companies even as earnings from two major tech companies loom large after the closing bell.
How stocks are trading
- The S&P 500 rose 26 points, or 0.6%, to 4,243
- The Dow Jones Industrial Average added 216 points, or 0.6%, to 33,153
- The Nasdaq Composite climbed 99 points, or 0.7%, to 13,117
On Monday, the Dow Jones Industrial Average
DJIA
fell 191 points, or 0.58%, to 32936, the S&P 500
SPX
declined 7 points, or 0.17%, to 4217, while the Nasdaq Composite
COMP
gained 35 points, or 0.27%, to 13018.
What’s driving markets
It’s been a busy Tuesday for earnings. The Dow is attempting to finish a four-day losing streak and so far, so good.
Coca-Cola
KO,
General Electric
GE,
3M
MMM,
and General Motors
GM,
were among the companies releasing results before the opening bell.
After the close, Microsoft
MSFT,
Alphabet
GOOGL,
Visa
V,
and Texas Instruments
TXN,
will release their earnings.
The results are giving investors another look at the economy and the health of the consumer. For example, at Coca-Cola Co., the beverage giant beat third quarter profit expectations and offered a sweet outlook.
About 30% of S&P 500 companies are slated to report this week, with the earnings season so far been better than Wall Street expected. About 19% of S&P 500 companies have already reported earnings, and three-quarters of them have posted earnings surpassing analysts’ expectations according to FactSet.
“It’s all about earnings,” in Tuesday’s trading day, said Kent Engelke, chief economic strategist and managing director at Capitol Securities Management. What’s especially reassuring for investors is what companies are — and are not — saying in their forward guidance, he noted.
“We’re not reading about inflation killing margins. The forward-looking statements aren’t like ‘this is it and tomorrow is going to be bad,” Engelke said.
Of course, Wall Street is awaiting results from more heavy hitters like Microsoft and Google. “The bar is set really high for them,” Engelke said.
Read also: Alphabet earnings: What to expect from the Google parent
While investors are getting a company-by-company look on Tuesday, they are also getting a bigger picture on manufacturing and services. That’s also playing into theme of an economy that keeps chugging along despite headwinds, Engelke said.
The S&P flash U.S. services-sector index increased to 50.9, up from 50.1. That’s a three-month high. The S&P U.S. manufacturing-sector index reached 50, up from 49.8. That’s a six month high. Numbers above 50 signal expansion in a sector.
See: U.S. economy gets off to good start in the fourth quarter, S&P finds, as inflation cools
“Sentiment has improved in part due to hopes of interest rates having peaked, something which looks increasingly likely given the further cooling of inflationary pressures,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.
But the other plot line for investors continues to be the Treasury market.
The 10-year Treasury yield
BX:TMUBMUSD10Y
reached 4.846% early afternoon Tuesday, up from a one-week low of 4.836% on Monday afternoon. But that’s still backing away from the 5% mark which occured at one point Monday.
The Monday retreat in yields came after Bill Ackman, manager of hedge fund Pershing Square, said he had closed his bet against 30-year Treasury bonds because “there is too much risk in the world to remain short bonds at current long-term rates,” and because “the economy is slowing faster than recent data suggests.”
Former Pimco bond chief Bill Gross also juiced the bond market rally by saying he expected a U.S. recession to begin by the end of the year and he was making bets interest rates would fall to reflect that.
Reviving an equity rally may require not just further declines in yields but also additional support from the ongoing third quarter corporate earnings reporting season analysts said.
“Overall, I suspect that a bottoming in both equities and Treasuries will be a process this week, and the fact that 1/3 of the S&P 500 reports earnings this week might help to aid in stabilization,” said Mark Newton, head of technical strategy at Fundstrat.
Companies in focus
-
General Motors Co.
GM,
-0.39%
shares are 0.2% lower. The car maker blew past earnings estimates for the third quarter. Meanwhile, the United Auto Workers announced it was expanding a strike to include GM’s truck plant in Arlington, Texas. -
General Electric Co.
GE,
+6.15%
rose 6.3% Tuesday, after the company posted better-than-expected third-quarter earnings and raised its guidance. -
Coca-Cola Co.
KO,
+2.44%
climbed 2.6% Tuesday, after the beverage giant beat third-quarter profit expectations and provided an upbeat outlook, as unit case volume returned to growth. -
Verizon Communications Inc.
VZ,
+8.87%
upped its free-cash-flow expectations for the year, and shares of the telecommunications company were headed about 9.6% higher in Tuesday’s trading. -
Halliburton Co.
HAL,
-3.43%
slipped 3.3% toward a three-day losing streak in early trading Tuesday, after the oil services company topped third-quarter profit expectations but came up a bit short on revenue, amid weakness in North America. -
3M Co.
MMM,
+5.18%
bounced 4.8% in early trading Tuesday, after the consumer, industrial and health care-products company swung to a third-quarter loss due to $4.2 billion settlement of Combat Arms earplugs litigation, but reported adjusted profit that was well above expectations and raised its full-year outlook.
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