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U.S. stocks climbed early Tuesday, with the Nasdaq and a number of bellwether technology names hitting a record after the parent company of Google posted results that came in well ahead of expectations, the latest example of an earnings season that is pointing to strength in U.S. corporations.
What are the main benchmarks doing?
The Dow Jones Industrial Average DJIA, +0.69% rose 0.5%, or 131 points, to 25,175. The S&P 500 index SPX, +0.77% gained 0.7%, or 20 points, to 2,826. The Nasdaq Composite Index COMP, +1.01% popped 1%, or 77 points, to 7,919. The Nasdaq hit a record, as did the Nasdaq-100 NDX, +1.35% , which rose 1.2% on the day.
The day’s gains were broad, with nine of the 11 primary S&P 500 sectors higher on the day. However, the tech sector was by far the biggest boost to the overall market. The sector climbed 1.2% and hit record levels, extending the industry’s strong year-to-date outperformance, which has lifted the overall market throughout 2018.
What’s driving the markets?
Earnings news will likely dominate the action for Tuesday as the busiest week of the season continues. Shares of Alphabet GOOGL, +4.99% jumped 4.7% a day after it reported results that topped expectations. The stock hit a record and was on track for its biggest one-day percentage jump since October 2015.
Alphabet is one of the so-called FAANG group of stocks that have fueled the overall market’s advance over the past several years, including thus far in 2018. The results could provide comfort that the quintet of huge internet and technology stocks still have room to run. Two other FAANG components, Facebook and Amazon, are scheduled to report later this week. Facebook FB, +2.38% shares rose 2.2% on Tuesday, hitting a record of their own.
The second-quarter earnings season has largely been strong. According to data from Charles Schwab, with 22% of the S&P 500 having reported thus far, 91% of companies have topped earnings expectations, while 75% have come in ahead of revenue forecasts.
Issues surrounding trade will likely also remain in focus, particularly after President Donald Trump tweeted that tariffs are “the greatest.” Escalating tensions between the U.S. and its major trading partners have been a major concern of investors of late, amid fears that the situation could evolve into a full-blown trade war.
Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs. It’s as simple as that - and everybody’s talking! Remember, we are the “piggy bank” that’s being robbed. All will be Great!
— Donald J. Trump (@realDonaldTrump) July 24, 2018
Investors were also weighing up the possibility of new stimulus from China, after the country’s State Council outlined measures aimed at boosting domestic consumption, such as corporate tax cuts and support for small businesses.
Chinese bond yields also rose a day after U.S. Treasurys and sovereign bonds got a lift from news reports the Bank of Japan could be ready to adjust its monetary policy approach at its next meeting. The yield on the 10-year U.S. Treasury note TMUBMUSD10Y, +0.06% was holding steady at 2.96%.
What are market analysts saying?
“This quarter is shaping up to be another barnburner of a quarter. We’re seeing a very large percentage of companies beating expectations and we don’t think we’ve seen a peak yet,” said Janet Johnston, portfolio manager at TrimTabs Asset Management, who singled out Alphabet as a company that had “a blowout quarter.”
She added, “trade remains the biggest risk out there, and if the issue continues to grow it’ll become a worry, but at this point there’s still time to work out the issues until tariffs that have been announced get implemented.”
What stocks are in focus?
Biogen Inc. BIIB, +4.57% jumped 4.4% after it posted adjusted second-quarter earnings that easily beat expectations, along with revenue that handily topped forecasts.
3M Co. MMM, -1.79% fell 2.7% after the Dow conglomerate reported better-than-expected earnings and revenue and raised its outlook.
United Technologies Inc. UTX, +2.25% gained 0.8% after it reported second-quarter earnings and sales that topped analyst forecasts. It also raised its outlook. The stock could provide one of the biggest boosts to the Dow.
Kimberly-Clark Corp. KMB, -0.62% fell 0.4% after it reported second-quarter revenue that missed expectations and issued a profit warning.
Lockheed Martin Corp. LMT, +0.28% rose 0.3% after the defense contractor reported second-quarter earnings and sales that came in ahead of expectations. It also raised its outlook.
Harley-Davidson Inc. HOG, +6.42% rose 3.7%. The motorcycle company reported adjusted second-quarter earnings that beat expectations, along with stronger-than-expected revenue.
Eli Lilly & Co. LLY, +2.04% advanced 1.6% after its second-quarter results came in well above expectations.
JetBlue Airways Corp. JBLU, -4.54% reported adjusted second-quarter earnings that beat expectations. However, the stock fell 6.1%.
Whirlpool Corp. WHR, -13.69% plummeted 13% after the appliance maker surprised by swinging to a quarterly loss with lower sales and a downbeat outlook on revenue.
U.S.-listed shares of Swiss banking group UBS Group AG UBS, +2.96% UBSG, +3.50% rose 3% after a forecast-beating profit rise. U.S. listed shares of Credit Suisse AG CS, +1.98% CSGN, +1.99% rose 2%.
What are other markets doing?
European stocks SXXP, +0.93% moved higher, led by gains for UBS and other banks, while Asian stocks pushed higher, rebounding from losses a day earlier.
The U.S. dollar was holding steady, while gold prices GCQ8, +0.27% were up 0.2%, and oil CLU8, +1.05% was up about 0.5% to $68.21 a barrel.