Stocks rise as earnings come in
U.S. stocks closed higher on Tuesday following positive earnings from top-tier companies and as investors were focused on quarterly results from Magnificent Seven and other megacap growth stocks.
Tesla kicked off the earnings cycle for technology heavyweights after markets closed on Tuesday. That will be followed by results from other tech majors, including Microsoft, Alphabet and Meta Platforms, later this week.
Markets were also buoyed by upbeat earnings from companies such as General Motors, which closed up after the automaker’s better-than-expected quarterly results.
Ten out of 11 S&P 500 sectors were advancing, led by gains in equities in communication services and technology sectors.
The S&P Materials sector ended lower, dragged by steelmaker Nucor Corp, which lost ground after a firstquarter earnings miss.
“We’re having a continuation of an oversold balance that started yesterday and the catalyst today is that markets are now refocused on earnings reports across a wide array of sectors that were strong,” said Keith Lerner, co-chief investment officer at Truist Advisory Services in Atlanta.
The Dow Jones Industrial Average rose 263.71 points, or 0.69%, to 38,503.69, the S&P 500 gained 59.95 points, or 1.20%, to 5,070.55 and the Nasdaq Composite gained 245.34 points, or 1.59%, to 15,696.64.
Data on Tuesday showed that U.S. business activity cooled in April to a four-month low due to weaker demand, while rates of inflation eased slightly even as input prices rose sharply, suggesting possible relief ahead for rising consumer prices.
Investors will be eyeing the release of the March Personal Consumption Expenditures index – the Federal Reserve’s preferred inflation gauge – which is due on Friday.
Money markets are now pricing in just about 43 basis points of interestrate cuts, down from about 150 bps seen at the start of the year, according to LSEG data.
“The PMI report was a little bit weaker and the employment was a little bit weaker and the market at this point is taking that as a bad-newsthere-is-good-news, meaning the people are becoming too hawkish on Fed expectations,” Lerner added.
Spotify surged after the Swedish music streaming giant posted gross profit topped 1 billion euros ($1.1 billion) for the first time.
A bullish full-year profit forecast lifted GE Aerospace shares. Danaher gained after the life sciences firm beat quarterly profit and sales forecasts.
Shares of JetBlue plunged as the low-cost carrier trimmed its annual revenue forecast following lukewarm first-quarter revenue.
Gold prices steadied Tuesday after hitting a more than two-week low on diminishing fears about an escalation of tensions in the Middle East, with investors awaiting key economic data for further clarity on the timeline on U.S. interest rate cuts.
Energy prices
Oil prices rose a dollar a barrel Tuesday as the U.S. dollar index fell to its lowest level in more than a week and as investors shifted their focus away from geopolitical issues in the Middle East to the state of global economies.
Brent crude futures were up $1.42, or 1.6%, to settle at $88.42 a barrel and U.S. West Texas Intermediate crude futures climbed $1.46, or 1.8%, to $83.36 a barrel.
U.S. crude oil inventories are expected to have increased last week while refined product stockpiles are likely to have fallen, a preliminary Reuters poll of analysts showed.
U.S. natural gas futures fell, pressured by forecasts for mild weather leading to lower gas demand for heating.