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Stocks rise to new records as investors focus on earnings reports

Financial Markets
The facade of the New York Stock Exchange.
(Richard Drew / Associated Press)

Major U.S. stock indexes closed mostly higher Tuesday, led by healthcare companies, retailers and banks.

The modest gains nudged the Standard & Poor’s 500 index and Nasdaq composite to all-time highs for the second straight day. The Dow Jones industrial average finished essentially flat.

Investors weighed another batch of mostly solid earnings reports. Sprint soared after a federal judge cleared a major obstacle to the company being acquired by T-Mobile. Microsoft and Facebook slumped after federal regulators announced they’ve ramped up an antitrust probe into the two companies as well as Amazon, Apple and Google parent Alphabet.

Cruise operators, hotels and other companies that focus on travel rose solidly, the latest sign that traders are feeling less worried about the economic effect of the coronavirus outbreak that began in China.

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“Stocks are collectively saying, ‘Hey, maybe we can work past some of the noise with the virus; maybe the fallout won’t be as big as we thought,’” said Willie Delwiche, investment strategist at Baird. “And the U.S. economy, so far at least, looks like it’s weathering it pretty well.”

The S&P 500 index rose 5.66 points, or 0.2%, to 3,357.75. The Dow slipped 0.48 points, or less than 0.1%, to 29,276.34.

The Nasdaq edged up 10.55 points, or 0.1%, to 9,638.94. The Russell 2000 index of smaller-company stocks climbed 9.85 points, or 0.6%, to 1,677.51.

Bond prices fell, sending bond yields higher. The 10-year Treasury yield rose to 1.60% from 1.54%.

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After a downbeat January, U.S. stocks have been mostly notching gains this month as traders brush off fears about the virus outbreak and its effects on businesses and the global economy. Beijing has promised to take measures to soften the blow to China’s economy, and investors are hopeful that other governments will do the same if necessary.

China remained mostly closed for business Tuesday as the daily death toll from the virus topped 100 for the first time, pushing the total deaths above 1,000. The outbreak has infected more than 43,000 people globally. Most of the cases and deaths are in China.

Travel-related stocks, which have been hammered by traders in recent weeks, notched gains Tuesday. Hilton Worldwide rose 1.4%, Carnival gained 2.8%, and American Airlines climbed 3.6%.

Wall Street got some encouragement Tuesday from Federal Reserve Chairman Jerome Powell. In his semiannual monetary report to Congress, Powell said it was too early to assess the threat the virus poses to the U.S. economy, but he noted that the economy “is in a very good place” with strong job creation and moderate growth.

Traders welcomed a federal judge’s decision to reject claims by a group of states arguing that T-Mobile’s proposed $26.5-billion buyout of rival Sprint would mean less competition and higher phone bills. Sprint shares surged 77.5%, and T-Mobile jumped 11.8%.

Meanwhile, the Federal Trade Commission said Tuesday that it has ordered Facebook, Amazon, Apple, Microsoft and Alphabet to turn over detailed information on their acquisitions going back to 2010 as part of an investigation into the five tech giants’ market dominance.

The FTC, the Justice Department and a House committee have been investigating the conduct of big tech companies and whether they aggressively bought potential rivals to suppress competition. Some critics have pointed to Facebook’s acquisition of Instagram and WhatsApp, for example, as deals that should be questioned.

Microsoft slid 2.3%, Facebook fell 2.8% and Apple dropped 0.6%. Amazon rose 0.8%, while Alphabet inched up 0.1%.

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Investors also assessed a batch of company earnings reports Tuesday.

AutoNation climbed 6.3% after the car dealership posted quarterly results that beat Wall Street’s forecasts, aided by higher demand for used cars.

Cloud-based phone system provider RingCentral also posted surprisingly good earnings and issued a solid forecast. The stock rose 6.8%.

Shares of Brighthouse Financial jumped 10.7% after the annuity and life insurance company posted strong quarterly results and announced a $500-million stock buyback program.

Goodyear Tire & Rubber slumped 12.4% after the tire maker reported fourth-quarter earnings and revenue that fell short of Wall Street forecasts.

Under Armour plunged 18.9% after the athletic gear company said it may need to restructure this year, which may involve scuttling the opening of its New York City flagship store. The company also gave investors a weak profit forecast for the year and said the virus outbreak in China will drag down first-quarter sales by $50 million to $60 million.

Benchmark crude oil rose 37 cents to settle at $49.94 a barrel. Brent crude oil, the international standard, rose 74 cents to close at $54.01 a barrel. Wholesale gasoline fell 1 cent to $1.51 a gallon. Heating oil climbed 2 cents to $1.63 a gallon. Natural gas rose 2 cents to $1.79 per 1,000 cubic feet.

Gold fell $9.10 to $1,565.60 an ounce. Silver fell 19 cents to $17.57 an ounce. Copper rose 3 cents to $2.59 a pound.


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