Dow Closes Higher For Twelfth Straight Session On Upbeat Earnings

Stocks fluctuated over the course of the trading day on Tuesday but largely maintained a positive bias throughout the session. While the tech-heavy Nasdaq outperformed its counterparts, the Dow managed to close higher for the twelfth straight session.

The Nasdaq climbed 85.69 points or 0.6 percent to 14,144.56 and the S&P 500 rose 12.82 points or 0.3 percent to 4,567.46, reaching its best closing level in over a year. The Dow pulled back off its best levels going into the close but still inched up 26.83 points or 0.1 percent to 35,438.07.

The higher close on Wall Street partly reflected a positive reaction to the latest batch of earnings news from big-name companies.

The uptick by the Dow came amid a strong gain by shares of 3M (MMM), which spiked by 5.3 percent after the industrial conglomerate reported better than expected second quarter results and raised its full-year profit forecast.

Chemical giant Dow Inc. (DOW) also jumped by 1.8 percent after reporting second quarter results that exceeded expectations on both the top and bottom lines.

Shares of General Electric (GE) also soared by 6.3 percent after the industrial giant reported better than expected second quarter earnings and boosted its full-year profit guidance.

“Wall Street is about one-fourth done with earnings season and so far most of the important corporate updates have delivered better-than-expected results,” said Edward Moya, senior market analyst at OANDA.

He added, “In the S&P 500, 76% of the companies that reported delivered EPS beats, while 62% had better-than-expected revenue results.”

Traders also remain optimistic about the Federal Reserve wrapping up its recent series of interest rate hikes ahead of Wednesday’s monetary policy decision.

The Fed is widely expected to raise interest rates by another 25 basis points, but traders are hopeful the rate hike will be the last following recent encouraging inflation data.

“Investors are clearly signaling that they expect this week’s announcement to mark the end of the rate-hiking cycle, followed by a series of aggressive rate cuts next year,” said John Lynch, Chief Investment Officer for Comerica Wealth Management.

He added, “While we also believe that this week’s announcement might be the final hike, we are less optimistic about the Fed’s willingness to make a dramatic dovish pivot next year as the futures market suggests.”

In U.S. economic news, the Conference Board released a report showing U.S. consumer confidence improved by much more than expected in the month of July.

The Conference Board said its consumer confidence index jumped to 117.0 in July from an upwardly revised 110.1 in June. Economists had expected the index to climb to 111.8 from the 109.7 originally reported for the previous month.

With the much bigger than expected surge, the consumer confidence index reached its highest level since July 2021.

Sector News

Steel stocks extended the rally seen on Monday amid optimism about additional Chinese stimulus, with the NYSE Arca Steel Index spiking by 3.3 percent to a new four-month closing high.

Computer hardware, semiconductor and software stocks also saw considerable strength, contributing to the advance by the tech-heavy Nasdaq.

Chemical stocks also moved significantly higher following the upbeat earnings news from Dow, driving the S&P Chemical Sector Index up by 1.5 percent.

Gold and housing stocks also saw notable strength, while airline stocks have moved sharply lower, resulting in a 3.2 percent nosedive by the NYSE Arca Airline Index.

Shares of Alaska Air (ALK) plummeted by 9.7 percent even though the airline reported second quarter results that beat analyst estimates on both the top and bottom lines.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher on Tuesday. China’s Shanghai Composite Index surged by 2.1 percent and Hong Kong’s Hang Seng Index spiked by 4.1 percent, although Japan’s Nikkei 225 Index bucked the uptrend and edged down by 0.1 percent.

Meanwhile, the major European markets finished the day narrowly mixed. While the French CAC 40 Index slipped by 0.2 percent, the German DAX Index crept up by 0.1 percent and the U.K.’s FTSE 100 Index rose by 0.2 percent.

In the bond market, treasuries saw further downside after turning lower over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.5 basis points to 3.912 percent.

Looking Ahead

The Fed decision is likely to be in the spotlight on Wednesday, although early trading may be impacted by reaction to earnings news from Google parent Alphabet (GOOGL) and Microsoft (MSFT), which are among the companies releasing their quarterly results after the close of today’s trading.

AT&T (T), Boeing (BA) and Cola-Cola (KO) are also among the companies due to report their quarterly results before the start of trading on Wednesday.

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