Tech companies raise U.S. stock earnings
Solid profits and forecasts from several technology companies helped lift U.S. stocks to modest gains Thursday, nudging the S&P 500 within striking distance of its all-time high.
The benchmark index wavered between small gains and losses through much of the day as investors reviewed another round of third-quarter earnings reports and company outlooks heading into 2020.
Traders have braced for weaker results this earnings season amid concerns about the costly trade war between the U.S. and China, and increased signs of slowing economic growth worldwide.
Earnings reports in the last couple of weeks have mostly exceeded Wall Street analysts’ modest expectations. However, many of those that delivered improved results for the quarter have also issued disappointing profit outlooks. That’s led to several days of uneven trading in the markets. On Thursday, decliners outnumbered gainers among stocks in the New York Stock Exchange.
“What we would have needed to see for the market to be really cheering this (earnings) story is if companies were beating and then raising forward expectations,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management. “But you’re not seeing that very consistently.”
After moving sideways for much of the day, the S&P 500 added 5.77 points, or 0.2 percent, to 3,010.29. The index is now within 0.6 percent of its all-time high set July 26.
The Dow Jones Industrial Average dropped 28.42 points, or 0.1 percent, to 26,805.53. The Nasdaq, which is heavily weighted with technology stocks, climbed 66 points, or 0.8 percent, to 8,185.80.
About one-third of the companies in the S&P 500 have released their results for the July-September quarter. So far, they amount to just over a 1.2 percent drop in profit overall, according to FactSet. That’s much better than initial expectations for a more than 4 percent contraction in earnings growth for all the companies in the index.
While that’s encouraging, investors are also focusing on company outlooks, which have been uneven.
“Financials looked OK, but the tech and industrials have been really mixed,” Haworth said. “You had good news from Microsoft, bad news from Texas Instruments, and that’s what has everyone stuck.”
The tech sector, already the biggest gainer this year, almost single-handedly accounted for the market’s gains Thursday as solid results from Microsoft, PayPal and other technology sector companies offset disappointing quarterly report cards from other companies. Microsoft rose 2 percent, PayPal climbed 8.6 percent and semiconductor equipment maker Lam Research surged 13.9 percent.