Stocks rise after corporate profits top forecasts

NEW YORK – Wall Street rose to a rare gain Tuesday after Verizon, General Electric and other big companies reported fatter profits for the summer than expected.

The S&P 500 climbed 30.64, or 0.7%, to 4,247.68 to break a five-day losing streak. The Dow Jones Industrial Average gained 204.97 points, or 0.6%, to 33,141.38, and the Nasdaq composite rose 121.55, or 0.9%, to 13,139.87. The Russell 2000 index of smaller companies rose 13.62 points, or 0.8% to 1,679.50.

Verizon jumped 9.3% after saying it increased its number of broadband subscribers by 20% and earned more than analysts expected during the summer.

General Electric rallied 6.5% after delivering betterthan-expected earnings and raising its profit forecast for the year. Coca-Cola rose 2.9% after it said growth in Mexico, India and other markets helped drive it to better profit during the summer than analysts expected.

The pace is picking up for companies to report their results for the summer, with more than 30% of companies in the S&P 500 on the schedule for this week. The broad hope is for S&P 500 companies to report the first growth in earnings per share in a year.

Such strength is crucial for the stock market to stabilize. It’s been mostly struggling since the summer under the weight of much higher yields in the bond market.

The 10-year Treasury yield has been rising rapidly from less than 3.50% in the spring and catching up with the Federal Reserve’s main overnight interest rate, which is at its highest level since 2001. The Fed has yanked its federal funds rate above 5.25% in hopes of starving high inflation of its fuel, and it’s indicated plans to hold the rate at a high level for a while.

High yields hurt prices for investments. They also slow the economy bluntly and add stress for the entire financial system.

But the 10-year Treasury yield was easing Tuesday after hitting its highest level since 2007 a day before. The 10-year yield was at 4.82%, down from 4.85% late Monday.

Until now, the overall economy has remained resilient despite much higher interest rates. A solid job market and consumer spending have helped keep the economy chugging along.

Strong data reports recently have driven expectations for the U.S. economy’s growth in the third quarter of the year sharply higher. Economists at Goldman Sachs, for example, have raised their forecast for the quarter’s growth to 4.6% from just 1.5% in mid-August.

A preliminary report on Tuesday said business activity is strengthening in October by more than economists expected. The report from S&P Global indicated demand for manufacturers improved for the first time since April.

While such strength has prevented a recession, it could also be giving inflation fuel and encourage the Fed to keep rates high for longer.

Gold for December delivery fell $1.70 to $1,986.10 an ounce. Silver for December delivery fell 9 cents to $23.12 an ounce, and December copper rose 4 cents to $3.62 a pound.

The dollar rose to 149.93 Japanese yen from 149.58 yen. The euro fell to $1.0589 from $1.0675.