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S&P 500, Nasdaq finish at records as investors cheer earnings

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July 25th, 2017      
 
The S&P 500 and the Nasdaq closed at records Tuesday, while the Dow industrials posted gains, following better-than-expected results from a number of high-profile companies.

The Dow Jones Industrial Average DJIA, -0.01% rose 100.46 points, or 0.5%, to close at 21,613.43. Leading the Dow higher were shares of Caterpillar Inc. CAT, -0.40% which finished up 5.9% after its earnings surged past expectations and it also raised its outlook. McDonald’s Corp. MCD, -0.80% posted earnings and sales that topped consensus forecasts, sending shares 4.8% higher.

The S&P 500 SPX, -0.23% rose 7.17 points, or 0.3%, to finish at a record 2,477.08, hitting an all-time high of 2,481.24, led by 1.3% gains in both energy and financial shares.

The Nasdaq Composite Index COMP, -0.09% rose 1.37 points to close at a record 6,412.17, after reaching an intraday record of 6,425.45, even as shares of Alphabet Inc. GOOG, +0.92% GOOGL, +0.85%  fell 3% following better-than-expected quarterly results but also record traffic acquisition costs.

Read more: Alphabet earnings keep Google investors in dark

Recent gains have been driven by the earnings season, and S&P 500 companies are on track to report earnings growth of 7.2%, along with average revenue growth of 5%. So far, more than 70% of firms that have reported beat earnings or sales expectations, according to FactSet.

“There’s been a mixed message but in general companies are coming in a little bit better and sounding better, and essentially central banks are pretty accommodative so the bull play is still pretty much in place and people are adding exposure to equities,” said Ian Winer, head of the equities division at Wedbush Securities.

A jump in oil prices isn’t hurting stocks, either, Winer said.

Oil futures CLU7, +1.45%  jumped 3.2% to settle at $47.89 a barrel after Saudi Arabia and Nigeria pledged to pull back on exports and limit output.

See: Why oil prices just scored the biggest one-day rally of 2017

“By most measures, this is a season where companies are surprising to the upside, and that’s a key driver for equity prices,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management. “We know valuations are full, but we’re cautiously optimistic because earnings are increasing and the Federal Reserve remains accommodative. That’s a favorable backdrop for equities.”
What 'Flash Boys' Brad Katsuyama thinks is killing Wall Street trade

Individual movers: 3M Co. MMM, -0.62% another in the group of Dow components reporting results on Tuesday, fell 5.1% after its second-quarter revenue missed expectations.

Freeport-McMoRan Inc. FCX, +0.48%  added 15% after it swung to a second-quarter profit.

TechnipFMC FTI, +0.80% FTI, +3.86%  fell 1.7% after the provider of oil-field services said it would restate some of its previous results because of material errors.

Biogen BIIB, -0.28% fell 0.6%, erasing an earlier gain that came after the biotech giant posted stronger-than-anticipated earnings and raised its full-year profit guidance.

Apparel and accessories seller Michael Kors Holdings Ltd. KORS, +0.69% finished up less than 0.1% after it agreed to acquire upscale shoemaker Jimmy Choo PLC CHOO, +0.11%  in a $1.2 billion deal. Shares of Jimmy Choo surged 17%.

General Motors Co. GM, -0.70%  reported a sharp drop in profits, a decline related to the sale of its European business and one-time charges linked to the company’s exit from some Asian markets. Shares of GM declined 0.7%.

Don’t miss: Here’s a sign investors are viewing earnings through rose-tinted glasses

Economic news: U.S. home-price growth eased slightly but remained healthy as demand outweighs supply throughout the housing market. The S&P/Case-Shiller 20-city index rose 5.7% in the three-month period ending in May compared with a year ago, down from 5.8% in the prior period.

A read on consumer confidence came in at 121.1 in July, the second-highest level for the index since 2000.

Check out: MarketWatch’s Economic Calendar

The Federal Reserve’s two-day policy meeting is due to kick off Tuesday, with the resulting policy announcement due Wednesday.

“While no change in policy is expected and no press conference is taking place, with the central bank believed to be preparing measures to reduce the balance sheet from September, there may be hints at such a move in the statement,” said Craig Erlam, senior market analyst at Oanda, in a note.

Other markets: European stocks SXXP, -1.04% rose as a survey showed German business sentiment at a “euphoric” level. Asian markets closed mixed. Gold futures GCQ7, +0.67%  declined 0.2% to settle at $1,252.10 an ounce, and a key dollar index DXY, -0.57% ticked 0.1% higher.

—Victor Reklaitis in London contributed to this report

 - MarketWatch.

See Also: S&P 500 News Blog Dow Jones Industrial Average

 

Stocks in U.S. Fluctuate as S&P 500 Heads for Its Best December Since 1991

December 31st, 2010

U.S. stocks swung between gains and losses, with the Standard & Poor’s 500 Index heading for its second straight annual advance and its best December since 1991.

Hewlett-Packard Co. and Microsoft Corp. fell at least 0.7 percent to lead losses in the Dow Jones Industrial Average. CVS Caremark Corp. gained 0.1 percent after the drugstore operator agreed to buy a unit of Universal American Financial Corp. Borders Group Inc. slumped 19 percent after suspending payments to some publishers. Alcoa Inc. rose 1.6 percent for the biggest gain in the Dow.

The S&P 500 fell less than 0.1 percent to 1,257.69 as of 11:21 a.m. in New York. The index has climbed 13 percent this year and 6.5 percent this month. The Dow slipped 1.66 points, or less than 0.1 percent, to 11,568.05 today, and is up 11 percent this year. The 2010 advance follows a 23 percent rise in the S&P 500 in 2009, making it the biggest two-year advance since the Internet-bubble rally of 1998 and 1999.

“This year has been like a long road trip. It wasn’t always pleasant while on the way, but it was good once we reached the destination,” said Lawrence Creatura, a Rochester, New York-based fund manager at Federated Investors Inc., which oversees about $340 billion. “Today we have skeleton crews at investment houses and trading shops so it’s likely going to be a very light day.”

Earnings, Fed Moves

The S&P 500 advanced 23 percent from its July low through yesterday as companies reported better-than-estimated earnings and the Federal Reserve pledged to buy up to an extra $600 billion in Treasuries to stimulate the economy. Its rally to a two-year high has pushed its valuation to 15.7 times reported profits, the most since June.

This year’s increase for the benchmark index for U.S. equities means the gauge has risen for seven of the past eight years. The index’s 86 percent surge from a 12-year low on March 9, 2009, is the biggest for a comparable time period since 1955, according to Howard Silverblatt, senior index analyst at S&P.

The S&P 500’s advance sent the gauge above 1,251.70 on Dec. 21 for the first time since Sept. 12, 2008, the last trading day before Lehman Brothers Holdings Inc. filed the world’s biggest bankruptcy and prompted a 46 percent drop for the benchmark gauge through March 2009. The December rally for the benchmark index comes after it lost 0.2 percent in November and posted a combined gain of 13 percent in September and October, the biggest increase during those months since 1998.

‘Optimistic’ on 2011

“I’m quite optimistic about the performance of equity markets in the year ahead,” said Andrew Popper, chief investment officer at SG Hambros Bank Ltd. in London. “We have the conditions in place for seeing this rally continuing. The economy is recovering at a global level.”

The benchmark gauge for American equities will rise 9.2 percent from yesterday’s close of 1,257.88 to 1,374 in 2011, bringing the increase since 2008 to 52 percent, according to the average of 11 strategists in a Bloomberg News survey.

Hewlett-Packard, the world’s largest computer maker, retreated 0.9 percent to $41.89 and Microsoft fell 0.7 percent to $27.67 as technology companies led declines in the S&P 500, dropping 0.4 percent as a group.

CVS Caremark gained 0.1 percent to $35.04. The drugstore operator said it will acquire the Medicare Part D business of Universal American Financial for about $1.25 billion. Universal American surged 37 percent to $20.

Clearwire Corp., a company creating a nationwide high-speed wireless network using WiMax technology, slumped 1.3 percent to $5.15 after it said Chairman Craig McCaw will step down today.

Borders slumped 19 percent to 93 cents. The bookstore chain has suspended payments to some publishers as refinancing talks continue, the Wall Street Journal reported, citing Publishers Marketplace.

Alcoa, the largest U.S. aluminum producer, rose 1.6 percent to $15.44.

Imax Corp. rallied 11 percent to $29.79. Sony Corp. may be preparing to bid more than $40 a share for the company that designs and makes giant-screen movie theaters, the Daily Mail reported, citing London traders. Walt Disney Co. may also be interested in bidding for Imax, the newspaper said.

 - Nikolaj Gammeltoft in New York at Bloomberg.