S&P 500 hits another record as earnings reporting season heats up
The Standard & Poor’s 500 climbed to another record Tuesday as earnings reporting season for big U.S. companies picked up the pace.
The index rose 14.17 points, or 0.3%, to 4,864.60. The Nasdaq composite also climbed, rising 65.66 points, or 0.4%, to 15,425.94. But the Dow Jones industrial average slipped 96.36 points, or 0.3%, a day after topping 38,000 for the first time. It finished at 37,905.45.
Procter & Gamble climbed 4.1% after posting a stronger profit for the latest quarter than analysts expected. The company behind Charmin and Olay brands benefited from price hikes for its products, and it raised its forecast for profit for this full fiscal year.
United Airlines flew 5.3% higher after it also reported a stronger profit for the last three months of 2023 than analysts expected. It made more in revenue from customers in both basic economy and premium seats, though it warned that it may lose money in the first three months of this year because of the grounding of its Boeing 737 Max 9 planes.
They helped offset an 11% tumble for 3M after it gave a forecast for earnings this year that fell short of analysts’ expectations. The maker of Post-it notes and Command strips was the main reason the Dow dropped from its record.
Johnson & Johnson was also a heavy weight on the market and fell 1.6% after reporting a weaker profit for the latest quarter than expected.
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Earnings season is kicking into gear, and more than a dozen companies in the S&P 500 reported their latest quarterly results Tuesday morning. More than 50 are scheduled to follow up later this week, including Tesla and Intel.
Among Tuesday’s headliners Verizon Communications, which rose 6.7% after beating analysts’ profit estimates. General Electric also topped expectations, but its stock sank 1% after it gave a forecast for profit this quarter that fell short of analysts’ forecasts. Home builder D.R. Horton sank 9.2% after reporting a weaker profit than expected.
Expectations are relatively low for companies’ profits at the end of 2023. Analysts have forecast that companies in the S&P 500 will deliver weaker overall earnings per share than a year earlier, which would be the fourth such decline in the last five quarters, according to FactSet.
Stocks have nevertheless rallied to records, and the S&P 500 returned to an all-time high last week for the first time in two years. Much of that is because of expectations for the Federal Reserve to cut interest rates several times this year.
Such cuts can boost prices for investments while relaxing the pressure on the economy and financial system. The Fed itself has said it may cut rates three times this year as inflation cools, which would allow the central bank to loosen its leash on the economy.
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Treasury yields already have eased significantly since the autumn on expectations for coming rate cuts, though critics warn that Wall Street may have gone overboard again in forecasting how many cuts will come and how soon the Fed will begin.
Yields were mixed in the bond market Tuesday. The yield on the 10-year Treasury rose to 4.14% from 4.11% late Monday, though it remains well below its 5% level during October.
The “everything rally” that began late last year on hopes for a pivot by the Fed probably caused mutual fund managers to scramble to boost their ownership of stocks to keep up. Even when stocks took a mini-breather at the start of 2024, investors seemed to “remain little concerned with downside risk,” according to strategists at Barclays led by Venu Krishna. That could leave “less room for fundamental upside from here.”
In stock markets abroad, Hong Kong’s Hang Seng index jumped 2.6% to recover some of its sharp losses for the year on hopes that Chinese authorities may make moves to shore up markets there. The Hang Seng is still down nearly 10% in the young year on worries about a weak recovery for the world’s second-largest economy.
In Japan, one of the world’s best performers for the year slipped even though the Bank of Japan kept its interest-rate policies at ultra-easy levels. The Nikkei 225 slipped 0.1% after analysts took comments by a bank official as hints that hikes to rates may be coming this year.
AP writers Matt Ott and Elaine Kurtenbach contributed to this report.
