Solid company earnings push stocks higher
Stocks on Wall Street closed broadly higher Thursday as investors welcomed another batch of encouraging quarterly results from big companies.
A breakthrough in negotiations over Britain’s exit from the European Union also helped put traders in a buying mood.
The gains erased the market’s modest losses from the day before. Despite a choppy week of trading, the benchmark Standard & Poor’s 500 index is on track for its second straight weekly gain.
Healthcare, communication services and industrial stocks drove much of the market’s gains. Technology was the only laggard. Smaller-company stocks outdid the rest of the market.
Investors have shifted their focus this week to corporate earnings results after weathering weeks of turbulence on Wall Street caused by developments in the U.S.-China trade war.
Several companies have turned in surprisingly good third-quarter results and outlooks. That has helped ease some investors’ concerns over the economy, though red flags remain over the trade war.
“About 76% of those [companies] that have reported have beat [expectations] on earnings,” said Adam Taback, deputy chief investment officer at Wells Fargo Private Bank.
And companies’ forecasts haven’t been as negative as many expected, Taback said, but many firms have raised concerns about ”slowing global growth and risk of trade wars.”
The S&P 500 index rose 8.26 points, or 0.3%, to 2,997.95. The index is within 1% of the all-time high it set in July.
The Dow Jones industrial average briefly slipped into the red but managed to close up 23.90 points, or 0.1%, at 27,025.88. The Nasdaq rose 32.67 points, or 0.4%, to 8,156.85.
Traders favored smaller-company stocks. The Russell 2000 index climbed 16.79, or 1.1%, to 1,541.84.
Bond prices fell. The yield on the 10-year Treasury note rose to 1.75% from 1.74%.
The market climbed early in the day as investors reviewed earnings reports from companies including Netflix, CSX and Morgan Stanley.
Netflix climbed 2.5% after the video streaming giant reported earnings that blew past analysts’ forecasts. The profit beat came even as revenue and subscriber growth fell short of forecasts, though some investors had been bracing for an even bigger letdown.
Netflix is facing major threats to its video streaming service from Apple and Disney, among others. That, and investors’ concerns about subscriber growth, have been weighing on the stock recently, pulling it down 23% from a recent peak in July.
Honeywell International gained 2.4% after serving up earnings that topped analysts’ forecasts. Railroad operator CSX rose 1.1% after quarterly results beat investors’ expectations.
Morgan Stanley climbed 1.5% after the bank reported solid third-quarter results.
U.S. stocks also got a boost from news that Britain had reached a tentative deal to separate from the European Union. The deal, which faces a potentially tough road to approval in Britain’s Parliament, led to a mixed finish for major European stock indexes.
Despite a midmorning wobble, U.S. stocks held on, extending their gains for the week.
Healthcare stocks continued to notch gains Thursday. The sector is up 2.4% this week and 2.1% for the month. By comparison, the S&P 500 index is up about 0.9% for the week and 0.7% for the month.
Still, healthcare is well behind most other sectors, with a gain of only 6.4% for the year. Most other sectors are up by double-digit percentages.
Benchmark crude oil rose 57 cents to settle at $53.93 a barrel. Brent crude oil, the international standard, rose 49 cents to close at $59.91 a barrel. Wholesale gasoline was unchanged at $1.62 a gallon. Heating oil rose 1 cent to $1.95 a gallon. Natural gas rose 2 cents to $2.32 per 1,000 cubic feet.
Gold rose $4.30 to $1,492.30 an ounce. Silver rose 19 cents to $17.54 an ounce. Copper rose 1 cent to $2.59 a pound.