U.S. Stocks Climb, Driven by Strong Earnings Reports
July 25 2017 - 10:19AM
Dow Jones News
By Riva Gold
-- Alphabet shares fall after earnings; Caterpillar gains
-- European bank stocks follow bond yields higher
-- U.S. crude oil climbs
The Dow Jones Industrial Average jumped more than 100 points
Tuesday, bolstered by a flurry of upbeat corporate earnings.
The blue-chip index added 106 points, or 0.5%, to 21622 shortly
after the opening bell. The S&P 500 rose 0.3%, and the Nasdaq
Composite slipped 0.1%.
Earnings reports are expected to drive much of the trading
action this week, analysts say, with roughly 40% of S&P 500
firms scheduled to report quarterly results through Friday. Solid
earnings should help major indexes keep climbing, although some
investors say they worry stock gains will slow in the later months
of the year.
A rally in Caterpillar and McDonald's lifted the Dow industrials
in early trade. Shares of Caterpillar gained 4.2% after the
equipment giant raised its revenue and profit outlook for the year,
while McDonald's shares jumped 4.1% after the fast-food chain's
earnings topped analysts' expectations.
Stock indexes also got a boost from energy shares, which jumped
1.6% in the S&P 500 as oil prices rallied.
U.S. crude gained 2.2% to $47.37 a barrel, extending gains from
Monday, when Saudi Arabia -- the world's top oil exporter -- said
it would limit oil exports in August.
Elsewhere, the Stoxx Europe 600 rose 0.6% after a measure of
German business confidence climbed to a record high in July.
Banks, insurance companies and miners drove most of Europe's
advance, as a modest rise in government bond yields supported
financial shares, since such moves tend to boost lending
income.
Government bonds fell as the Federal Reserve was set to begin
its two-day policy meeting Tuesday. The yield on the 10-year U.S.
Treasury note rose to 2.300%, according to Tradeweb, from 2.253% on
Monday. Yields rise as bond prices fall.
Economists expect no change in interest rates at this juncture,
though some have speculated the central bank could announce the
start date of its balance sheet runoff.
"I think there's a relatively low ceiling on where [policy] can
go unless inflation kicks in," said John Maxwell, fund manager at
Ivy Investments. "We don't have signs of inflation that need to be
tamed."
The CBOE Volatility Index, which measures investors'
expectations for swings in the S&P 500 over the next 30 days,
extended losses Tuesday. The VIX was recently down 1% to 9.34, on
track to close under 10 for its ninth consecutive session -- its
longest such streak ever.
Earlier, Australia's S&P/ASX 200 added 0.7%, outperforming
stock markets in the region, following a weak session on Monday.
Major banks and mining companies advanced, while shares there drew
some support from a climb in oil prices.
Indexes in Japan, Hong Kong and Taiwan were barely changed from
Monday's closing levels, while South Korea's Kospi Composite Index
fell 0.5% from a record high, snapping an eight-day winning
streak.
Akane Otani contributed to this article.
Write to Riva Gold at riva.gold@wsj.com
(END) Dow Jones Newswires
July 25, 2017 10:04 ET (14:04 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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