By Anora M. Gaudiano, MarketWatch , Ryan Vlastelica
Netflix falls after results disappoint, but trades well off its
lows
U.S. stock rose on Tuesday, extending a recent upswing after
Federal Reserve Chairman Jerome Powell indicated the U.S. central
bank wouldn't move too quickly in changing monetary policy, and
that it would be flexible in the face of changing conditions.
Traders also digested the latest round of corporate earnings,
which came in mixed but nevertheless showed strong growth.
What are markets doing?
The Dow Jones Industrial Average added 46 points, or 0.2%, to
25,110. The blue-chip average is on track for its fourth straight
advance, as well as its eighth rise of the past nine sessions.
The S&P 500 was up by 11 points, or 0.4%, to 2,809. The
Nasdaq Composite Index advanced by 46 points, or 0.6%, to 7,852,
hitting its latest in a series of intraday records.
The day's gains were broad, with 10 of the 11 primary S&P
500 sectors higher on the day. Leading the move higher was the
materials sector, which rose 1.4%, and technology stocks, up
0.8%.
What is driving the market?
Appearing in front of the Senate Banking Committee, Powell said
the "best way forward is to keep gradually raising the
federal-funds rate for now." This was seen as suggesting that the
central bank wouldn't become too aggressive in raising rates,
something that is widely seen as a risk to markets.
See:Fed Chairman Powell testifies before Congress--live video
and blog
(http://www.marketwatch.com/story/powell-testifies-before-congress-live-video-and-blog-2018-07-17)
The main driver for individual stocks, however, is quarterly
results, with a batch of Dow components and other major companies
setting the early tone for the market.
Goldman Sachs Group Inc.(GS) reported second-quarter earnings
that rose above expectations, but revenue fell below analysts'
consensus estimates
(http://www.marketwatch.com/story/goldmans-stock-falls-as-earnings-beat-but-revenue-misses-expectations-2018-07-17).
In a separate internal memo, the investment bank also announced
that CEO Lloyd Blankfein would step down Oct. 1 and be replaced by
President David Solomon. Shares were down 1%.
Johnson & Johnson(JNJ) reported second-quarter earnings and
revenue that were better than expected
(http://www.marketwatch.com/story/jjs-pharma-business-spurs-sales-growth-2018-07-17),
supported by strong sales of its cancer drugs and other medicines.
Shares spiked 3.5% in their biggest one-day percentage advance
since January 2016.
UnitedHealth Group Inc.(UNH) reported second-quarter earnings
that beat expectations but premiums that missed. The company also
raised its full-year earnings outlook
(http://www.marketwatch.com/story/unitedhealth-raises-profit-outlook-2018-07-17-13485315),
but shares fell 2.6%.
Netflix Inc. shares (NFLX) tumbled 6% after the streaming-media
company late Monday reported revenue and subscriber numbers that
came in below forecasts
(http://www.marketwatch.com/story/netflix-stock-slammed-after-second-quarter-subscriber-numbers-and-revenue-fall-short-2018-07-16).
While the stock was among the biggest S&P 500 decliners of the
day, it was well off its lows of the session, having previously
dropped as much as 14%. Shares remain up 96% thus far this
year.
Read more:Is Netflix falling down a mountain, or just tripping
over a molehill?
(http://www.marketwatch.com/story/is-netflix-stock-falling-down-a-mountain-or-just-tripping-over-a-molehill-2018-07-16)
What are strategists saying?
"We've had a lull in trade talk, which has allowed investors to
focus on earnings. In order for earnings to really provide a boost
to stocks, we'd have to exceed expectations, and the potential for
that is there," said David Joy, chief market strategist at
Ameriprise Financial. "Recent momentum has been positive."
Read:Fund managers say trade spat is the biggest risk stocks
have faced in years
(http://www.marketwatch.com/story/fund-managers-say-trade-spat-is-the-biggest-risk-stocks-have-faced-in-years-2018-07-17)
What's on the economic calendar?
Industrial production
(http://www.marketwatch.com/story/the-economys-heavies-boost-industrial-production-in-june-to-cap-off-strong-second-quarter-2018-07-17)
rose 0.6% in June to more than offset a similarly sized decline in
May, the Federal Reserve said Tuesday. That was a tick above the
MarketWatch forecast.
The National Association of Home Builders' monthly confidence
index
(http://www.marketwatch.com/story/home-builder-confidence-holds-up-as-buyer-demand-offsets-trade-war-costs-2018-07-17)
was unchanged at 68 in July.
See: MarketWatch's Economic Calendar
(http://www.marketwatch.com/economy-politics/calendars/economic)
Which stocks are in focus?
Technology stocks supported the overall market's advance. Among
notable names, Microsoft Corp. (MSFT) was up 1.1% while Alphabet
Inc. (GOOGL) gained 1.4%. Amazon.com Inc. (AMZN) , a consumer
discretionary stock that often trades on tech issues, rose
1.3%.
CSX Corp.(CSX) and United Continental Holdings Inc.(UAL) are
among companies on the earnings docket after the market's
close.
Papa John's International Inc. stock (PZZA) was down 1% after
the pizza maker's founder said it was a "mistake" to step down as
chairman last week
(http://www.marketwatch.com/story/papa-johns-founder-it-was-a-mistake-to-resign-as-chairman-2018-07-17).
What are other markets doing?
Asian stocks closed mostly lower
(http://www.marketwatch.com/story/asian-stocks-mostly-lower-as-weak-energy-shares-weigh-2018-07-16),
but Japan's Nikkei 225 index bucked the negative trend.
Trading in Europe was mixed, leaving the benchmark Stoxx Europe
600 index struggling for direction.
Oil prices traded higher, after steep declines on Monday when
chatter about possible releases from global reserves sent Brent
crude and West Texas Intermediate oil down more than 4%
(http://www.marketwatch.com/story/oil-price-drops-ahead-of-trump-putin-summit-2018-07-16).
Gold futures settled 1% lower
(http://www.marketwatch.com/story/gold-aims-to-snap-2-session-skid-as-dollar-gauge-sees-muted-action-2018-07-17)at
$1,227.30 an ounce on Tuesday.
The ICE U.S. Dollar Index , a measure of the dollar against a
half-dozen currencies, meanwhile, rose 0.3% to 94.784.
--additional reporting by Sara Sjolin
(END) Dow Jones Newswires
July 17, 2018 14:37 ET (18:37 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.