U.S. Stocks Climb, Driven by Strong Earnings Reports
July 25 2017 - 4:18PM
Dow Jones News
By Riva Gold and Akane Otani
-- Caterpillar, McDonald's rise after earnings, supporting Dow industrials
-- Bank stocks climb with bond yields; 10-year Treasury yield near 2.3%
-- Energy stocks follow oil prices higher; U.S. crude up roughly 3%
U.S. stocks climbed Tuesday, bolstered by a flurry of upbeat
earnings results.
Company earnings are expected to drive much of the trading
action this week, analysts say, with roughly 40% of S&P 500
firms scheduled to post quarterly results through Friday.
Solid reports should help major indexes keep climbing, investors
say, even as many have expressed concerns about stocks looking
pricey relative to their historical valuations.
"We're seeing other parts of the world experiencing growth for
the first time in a number of years," said Ron Sanchez, chief
investment officer at Fiduciary Trust. "The global backdrop is very
positive for stocks."
The Dow Jones Industrial Average added 104 points, or 0.5%, to
21617, after three consecutive sessions of declines. The S&P
500 rose 0.3%, and the Nasdaq Composite added less than 0.1%.
A rally in Caterpillar, McDonald's and DuPont helped lift the
Dow industrials. Shares of Caterpillar gained 5.8% after the
equipment giant raised its revenue and profit outlook for the year,
while McDonald's shares jumped 5.2% after the fast-food chain's
earnings topped analysts' expectations. Shares of DuPont, whose
earnings also surpassed expectations, added 1.2%.
Declines in the shares of 3M and United Technologies, both of
which released quarterly results earlier Tuesday, weighed down the
blue-chip index.
Stock indexes also received a boost from energy shares, which
jumped 1.5% in the S&P 500, buoyed by a climb in oil prices.
Energy stocks, the worst-performing sector in the S&P 500 this
year, have come under pressure this year as oil prices have
slid.
U.S. crude rose 3.3% to $47.89 a barrel Tuesday, extending gains
from Monday, when Saudi Arabia -- the world's top oil exporter --
said it would limit oil exports in August. It was crude's biggest
one-day percentage gain since November.
Government bond prices fell ahead of the release of the Federal
Reserve's latest policy statement, expected Wednesday. The yield on
the 10-year U.S. Treasury note rose to 2.328% from 2.253% on
Monday. Yields rise as bond prices fall.
Economists expect no change in interest rates, though some
expect 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 rise in government bond yields supported financial shares,
since such moves tend to boost lending income. The KBW Nasdaq Bank
Index of large U.S. commercial lenders added 1.5%.
The Stoxx Europe 600 rose 0.4% 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.
Australia's S&P/ASX 200 added 0.7%, outperforming stock
markets in the region. South Korea's Kospi Composite Index fell
0.5% from a record high, snapping an eight-day winning streak.
Write to Riva Gold at riva.gold@wsj.com and Akane Otani at
akane.otani@wsj.com
(END) Dow Jones Newswires
July 25, 2017 16:03 ET (20:03 GMT)
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