Dow opens at record; Apple earnings eyed
US stock indexes kicked off the month on a strong note, with the Dow coming within spitting distance of the 22,000 mark, powered by gains in Goldman Sachs and 3M.
The index had pierced through the 21,000 mark five months ago and had breached the 20,000 milestone in January. All eyes will be on the quarterly performance of Dow-component Apple, which reports results after the closing bell. The iPhone maker’s shares were little changed.
Tech has been the best performing sector this year, despite the sector going through bouts of volatility of late on rising valuation concerns. The tech index was up 0.27 percent in early trading. Investors have been counting on earnings to support high valuations for equities. The S&P 500 is trading at about 18 times earnings estimates for the next 12 months, above its longterm average of 15 times.
S&P 500 earnings are expected on average to have grown 10.8 percent in the second quarter, according to Thomson Reuters I/B/E/S. “It’s been a very good earnings season so far which is helping to sustain US stocks at record highs and offset any disappointment with Donald Trump’s inability to make progress on his growth policies,” said Craig Erlam, senior market analyst at online forex broker Oanda.
The Dow hit a record closing high on Monday, helped by Boeing, while selling in technology companies kept the S&P 500 in check and pulled the Nasdaq lower.
At 9:40 am ET (1340 GMT), the Dow Jones Industrial Average was up 61.02 points, or 0.28 percent, at 21,952.14 and the S&P 500 was up 4.19 points, or 0.16 percent, at 2,474.49. The Nasdaq Composite was up 15.46 points, or 0.24 percent, at 6,363.58.
Ten of the 11 major S&P sectors were higher, with the financial index’s 0.39 percent rise leading the advancers. Economic data showed US consumer spending barely rose in June as income failed to increase for the first time in seven months. The core PCE numbers - the Federal Reserve’s preferred metric to gauge inflation - for June edged up 0.1 percent following a similar increase in May. In the 12 months through June, the so-called core PCE price index increased 1.5 percent after advancing by the same margin in May, remaining below the Fed’s 2 percent target rate.
Pfizer edged down 0.72 percent after the drugmaker’s quarterly revenue missed expectations. Under Armour fell 8.70 percent after the sportswear maker cut its full-year sales forecast. Sprint jumped 8.26 percent after swinging to a quarterly profit for the first time in three years. Lumber Liquidators soared 28.31 percent after the hardwood flooring retailer reported its first quarterly profit since a 2015 scandal related to allegations of carcinogens in its products dented sales. World stocks, on their longest streak of monthly gains in more than a decade, rose on Tuesday amid further signs that the global economy is in fine fettle, while the beaten-down dollar edged up slightly from 14-month lows. — Reuters