Corporate profits propel stocks
U.S. indexes return to their record-setting ways as energy companies gain.
NEW YORK — U.S. stock indexes returned to records Tuesday as corporate profits continue to come in better than analysts expected.
Caterpillar was among the big companies that reported healthier-than forecast results. The heavy equipment maker boosted its full-year forecast as ordering activity picked up.
Sharp moves higher in prices for oil, metals and other commodities also helped lift companies that produce energy and raw materials.
The Standard & Poor’s 500, the Nasdaq composite and the Russell 2000 index of small-cap stocks all set records.
Leading the way for the market were energy stocks, which benefited from a second strong day for the price of oil. That helped energy stocks in the S&P 500 climb 1.3 percent, tied for the biggest gain among the 11 sectors that make up the index.
A rise in yields on Treasury notes came as the Federal Reserve began a two-day policy meeting on interest rates. The central bank has already raised rates three times since December, but few investors expect it to make another move when it announces its decision Wednesday. Most expect the next rate increase to come later this year.
It may not have shown on Tuesday, but many investors are bracing for markets to get shakier as the Fed moves further away from record low interest rates and big stimulus for the economy. Contrarians are also concerned about how much the stock market has climbed and how smooth the ride has been, as expectations have built up this year for corporate profits to keep piling higher.
“There’s a lot of hope built into the market at current levels,” said Rob McIver, portfolio manager at the $6.3 billion Jensen Quality Growth fund. “We’re cautioning investors to be cautious and conservative.”