Stocks set records as profits rise
NEW YORK — U.S. stock indexes returned to records Tuesday as corporate profits continue to come in better than analysts expected.
The Standard & Poor’s 500 rose 7.17 points, or 0.3 percent, to an all-time high of 2,477.08. It was the first gain for the index in four days.
The Dow Jones industrial average rose 100.26, or 0.5 percent, to 21,613.43. The Nasdaq composite rose 1.37 points, or less than 0.1 percent, to 6,412.17, and the Russell 2000 index of small-cap stocks jumped 12.33, or 0.9 percent, to 1,450.39. Both the Nasdaq and Russell set records.
McDonald’s and Caterpillar were among the big companies that reported healthier- than- forecast results. Sharp moves higher in prices for oil, metals and other commodities also helped lift companies that produce energy and raw materials. That more than offset losses for health care companies and stocks that pay relatively big dividends, which were hurt by a rise in Treasury yields.
Leading the way for the market were energy stocks, which benefited from a second strong day for the price of oil. Benchmark U.S. crude rose $1.55, or 3.3 percent, to
settle at $ 47.89 per barrel. Brent crude, the international standard, gained $1.60, or 3.3 percent, to $50.20 a barrel.
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. Devon Energy rose $1.24, or 3.9 percent, to $32.98, for example, while Marathon Oil gained 46 cents, or 3.9 percent, to $12.34.
Financial stocks were also strong after a pickup in interest rates raised expectations that banks could charge more for loans and pocket bigger profits.
The yield on the 10-year Treasury note climbed to 2.32 percent from 2.26 percent late Monday. The two-year yield climbed to 1.38 percent from 1.36 percent, and the 30-year yield rose to 2.91 percent from 2.83 percent.
The rise in yields 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 today. 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 Federal Reserve 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 that corporate profits will 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.”
In the commodities market, natural gas rose 5 cents to $2.94 per 1,000 cubic feet, heating oil gained 5 cents to $1.57 per gallon and wholesale gasoline climbed 4 cents to $1.60 per gallon.
Metals prices also climbed, which helped to lift shares of mining companies and other raw-material producers. Copper jumped 11 cents, or 4 percent, to $2.85 per pound, while silver rose 10 cents to $ 16.54 per ounce and gold slipped $2.20 to $1,252.10 an ounce.