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Stocks edge up after a mixed set of earnings reports

Wall Street
Outside the New York Stock Exchange.
(Mark Lennihan / Associated Press)

U.S. stock indexes eked out tiny gains Wednesday after a wobbly day of trading as investors reviewed another uneven set of quarterly reports from big companies.

Some of the companies’ earnings topped analysts’ expectations. Others warned that the slowing global economy and trade tensions are hitting their profits, putting traders in a selling mood.

Although it’s still early this earnings-reporting season, traders are trying to gauge how much the U.S.-China trade war and a slowdown in global economic growth is hurting corporate America.

The lack of direction in earnings Wednesday was reflected in the market, which spent most of the day wavering between tiny gains and losses.

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“Fewer than a quarter of the companies have reported, so there’s a lot more to come,” said Sam Stovall, chief investment strategist at CFRA. ”But the results have been mixed so far, even with the bar being set as low as it was.”

The Standard & Poor’s 500 index ended with a gain of 8.53 points, or 0.3%, to 3,004.52. The benchmark index is within 0.8% of the all-time high it set in July.

The Dow Jones industrial average rose 45.85 points, or 0.2%, to 26,833.95. The Nasdaq composite rose 15.50 points, or 0.2%, to 8,119.79. The Russell 2000 index of smaller-company stocks edged up 1.99 points, or 0.1%, to 1,552.86.

Bond yields mostly held steady. The yield on the 10-year Treasury note was unchanged at 1.76%.

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Roughly a quarter of the companies in the S&P 500 have reported how much they made in July through September, and analysts are still forecasting the index will end up showing a drop in earnings per share compared with a year earlier.

If they’re right, it would be the first time earnings have fallen for three straight quarters since 2015-16, according to FactSet.

The weakest results are expected to come from companies that rely on the strength of the global economy, which has been slowing. Raw-material producers, technology companies and energy firms are predicted to report earnings declines of 10% or more, according to FactSet.

Analysts are forecasting stronger growth for communications companies and businesses that sell to consumers, which have been the strongest part of the economy.

One worrisome sign is that estimates for 2020 corporate earnings growth have been mostly reduced since the end of last month, Stovall said.

“There’s so much uncertainty out there right now,” he said. ”The U.S.-China trade relations … and what kind of an impact Europe could experience when Britain does finally leave the EU.”

Healthcare companies helped lead stocks higher Wednesday, powered in part by Thermo Fisher Scientific, which rose 5.7% after reporting stronger-than-expected profits and raising its forecast for full-year revenue and profit.

Boeing rose 1% after it said that its 737 Max airplane may return to service by the end of the year and that it will gradually increase 737 production by late 2020. That helped make up for its weaker-than-expected profit for the latest quarter.

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On the losing end was Texas Instruments, which slid 7.5% after saying its customers have become far more cautious than they were even 90 days ago, with trade tensions a big factor. It reported stronger profits for the latest quarter than analysts expected, but its forecast for this quarter fell short of their estimates.

Caterpillar, another company whose fortunes are seen on Wall Street as closely tied to President Trump’s trade wars, briefly declined before climbing 1.2% after reporting weaker-than-expected profit for the latest quarter.

American Airlines Group, Amazon and Visa are among the companies scheduled to report earnings Thursday.

Benchmark U.S. crude oil rose $1.49 to $55.97 a barrel. Brent crude oil, the international standard, rose $1.47 to $61.17 a barrel.

Wholesale gasoline rose 4 cents to $1.65 a gallon. Heating oil climbed 2 cents to $1.96 a gallon. Natural gas rose 1 cent to $2.28 per 1,000 cubic feet.

Gold rose $8.20 to $1,489.90 an ounce. Silver rose 8 cents to $17.52 an ounce. Copper rose 4 cents to $2.66 a pound.


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