U.S. stocks were higher Tuesday, buoyed by stronger than expected results from several blue chip companies and signs the manufacturing and service sector are holding up amid cooling inflation and high interest rates.
How stocks are trading
- The S&P 500 rose 36 points, or 0.8%, to 4,253
- The Dow Jones Industrial Average added 300 points, or 0.9%, to 33,237
- The Nasdaq Composite climbed 127 points, or 0.9%, to 13,145
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 morning for earnings reports and major tech company results are coming after the bell. The Dow is off to a good start as it tries to snap a four-day losing streak.
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.
While investors are getting a company-by-company look on Tuesday, they are also getting a bigger picture on manufacturing and services.
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.
Read also: Alphabet earnings: What to expect from the Google parent
But the other plot line for investors continues to be the Treasury market.
Stocks are holding up Tuesday morning even as Treasury yields were creeping higher.
The 10-year Treasury yield
BX:TMUBMUSD10Y
increased to 4.88%, up from a one-week low of 4.836% on Monday afternoon. At one point Monday, the yield passed the 5% mark.
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.
“As we hit 5% the famous and not so famous buyers seemed to come out of the woodwork,” said Jim Reid, strategist at Deutsche Bank.
Still, the recent run up in yields over recent weeks on the back of strong economic data and concerns over oversupply of Treasuries saw the S&P 500 index close Monday with a 3.6% loss over the last five days, with technical analysts wary that the stock barometer has dropped below its 200-day moving average.
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,
+0.19%
rose 0.2% Tuesday, after 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,
+6.89%
rose 7.2% Tuesday, after the company posted better-than-expected third-quarter earnings and raised its guidance. -
Coca-Cola Co.
KO,
+2.66%
jumped nearly 3% 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,
+8.86%
upped its free-cash-flow expectations for the year, and shares of the telecommunications company were headed about 8.8% higher in Tuesday’s trading. -
Halliburton Co.
HAL,
-2.88%
slipped 2% 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 5.7% 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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