By Clive McKeef
S&P 500 now just 0.29% from its record close hit July 15
Stocks closed higher Tuesday on news of progress on U.S. - China
trade talks, an announcement of a While House and Congressional
deal on the federal budget and debt ceiling and good corporate
earnings.
Better-than-expected earnings from Dow Jones Industrial Average
components, Coca-Cola and United Technologies reported before the
market opened also helped stocks rise for a second day.
How are the major benchmarks faring?
The Dow Jones Industrial Average closed up 177 points at 27,349,
while the S&P 500 index advanced 20 points to 3,005 and the
Nasdaq Composite Index ended up 47 points at 8,251.
The Dow saw its second highest close ever after two days of
gains and ended at the highest since July 15. The S&P 500 ended
at its third highest ever and is now just 0.29% from its record
close of 3014.30 hit Monday, July 15, 2019.
But including Tuesday, the DJIA has not had a 1% move in either
direction for 24 consecutive trading days, the longest such streak
since August-October 2018 when it went 30 days without a 1% move.
Similarly, the S&P 500 has not had a 1% move in either
direction for 31 trading days, the longest such streak since
June-October 2018 when it went 74 days without a 1% move.
What's driving the market?
Talks between China and the U.S. would start Monday as U.S.
negotiators headed to China, Bloomberg reported
(https://www.bloomberg.com/news/articles/2019-07-22/asian-stocks-set-for-modest-gains-oil-advances-markets-wrap?srnd=premium).
The U.S. delegation will be led by Trade Representative Robert
Lighthizer and will be in China through Wednesday. Earlier the Hong
Kong based South China Morning Post
(http://www.marketwatch.com/story/us-trade-negotiators-likely-to-visit-china-next-week-report-2019-07-23)also
reported that U.S. trade negotiators were likely to visit China
next week.
The world's two largest economies have been locked in a trade
war that has seen 25% tariffs imposed by President Donald Trump on
$200 billion of Chinese products. China has retaliated with their
own tariffs prompting fears of a global economic slowdown.
Stocks got support earlier in the day from news congressional
leaders announced a budget deal
(http://www.marketwatch.com/story/trump-says-compromise-deal-on-budget-debt-ceiling-reached-2019-07-22)
with the White House that will also raise the federal government's
debt ceiling. If approved by both the House and Senate, the deal
likely would avoid a repeat of the government shutdowns that
plagued Washington in early 2018 and again at the beginning of
2019.
"This morning's announcement of the deal between Congress and
the White House to suspend the debt ceiling for the next two years
is undiluted good news," Brad McMillan, Chief Investment Officer
for Commonwealth Financial Network said. "With an agreement that
the government can borrow to spend the money that it has already
committed to spending, we can avoid a totally unnecessary,
politically driven crisis that could have caused real economic
damage."
Better-than-expected earnings from Dow Jones Industrial Average
components, Coca-Cola (KO) and United Technologies (UTX) reported
before the market opened also helped stocks rise for a second
day.
More than 18% of S&P 500 companies have posted quarterly
numbers this earnings season. Of those companies more than 78% have
reported better-than-expected profits, according to FactSet data.
Those companies have also seen their earnings grow by an aggregate
of 3.6%.
Visa , Chipotle (CMG), and Snap (SNAP) are due to report
earnings after the market close Tuesday.
Earnings reporting season rolls on this week with companies
including Amazon.com , Alphabet (GOOGL), Caterpillar (CAT),
McDonald's (MCD) and (BA) still to report.
Wall Street also expects the Federal Reserve to lower interest
rates by at least 25 basis points when it meets at the end of July,
and economists expect the European Central Bank to cut rates at its
meeting Thursday.
The International Monetary Fund said in its World Economic
Outlook
(http://www.marketwatch.com/story/imf-cuts-its-global-growth-forecasts-again-2019-07-23)report
that the global economy is expected to expand by 3.2% in 2019, down
0.1 percentage points from its April forecast and 0.3 percentage
points below the estimate at the start of the year.
The IMF cited concerns about the ongoing U.S.-China trade war
and noted that "global technology supply chains were threatened by
the prospect of U.S. sanctions, Brexit-related uncertainty
continued, and rising geopolitical tensions roiled energy
prices."
Read:Brace yourselves for Britain's new prime minister -- here's
how markets may react
(http://www.marketwatch.com/story/brace-yourselves-for-britains-new-prime-minister---heres-how-markets-will-react-2019-07-22)
Which stocks are in focus?
Dow-members Coca-Cola Co.(KO) saw its shares climb to a record
after reporting better-than-expected earnings
(http://www.marketwatch.com/story/coca-cola-earnings-get-a-jolt-from-ready-to-drink-costa-coffee-2019-07-23)and
raising its revenue forecast.
United Technologies Corp.(UTX), also a Dow component, beat
earnings forecasts also and raised its full year outlook for
earnings and revenue.
Apple Inc. (AAPL) shares rose, following a report in the Wall
Street Journal
(https://www.wsj.com/articles/apples-and-intels-no-brainer-deal-11563900798?mod=searchresults&page=1&pos=1)that
it is in "advanced talks' to buy Intel Corp.'s smartphone-modem
chip business, valued at $1 billion. Apple stock rose 2.3% Monday,
the best performing stock in the Dow
(http://www.marketwatch.com/story/stock-futures-point-to-higher-start-ahead-of-earnings-deluge-2019-07-22).
Intel shares advanced 0.9%.
Shares of Biogen Inc.(BIIB) were also on the rise after the
company topped earnings forecasts and raised its outlook
(http://www.marketwatch.com/story/biogens-stock-jumps-after-big-earnings-beat-raised-outlook-2019-07-23).
Lockhead Martin Corp. (LMT) stock fell, even after the aerospace
and defense manufacturer surpassed analyst expectations for
second-quarter profits and sales
(http://www.marketwatch.com/story/lockheed-martin-shares-climb-premarket-after-earnings-beat-2019-07-23).
Shares of Snap Inc. (SNAP) were up, after Stifel analyst John
Egbert upgraded the stock
(http://www.marketwatch.com/story/snap-stock-gains-after-stifel-upgrades-ahead-of-earnings-2019-07-23)
from buy to hold, ahead of the social media company's
second-quarter earnings results, due after the close of trade
Tuesday.
How are other markets trading?
The 10-year U.S. Treasury note rose 3 basis points to 2.07%. The
benchmark note yield has edged up for three days to its highest
since July 16.
Oil futures reversed earlier losses on Tuesday to tally a gain
for the session, a day ahead of data that are expected to reveal a
sixth consecutive weekly decline in U.S. crude supplies. West Texas
Intermediate crude for September rose 55 cents, or 1%, on the New
York Mercantile Exchange to $56.77 a barrel.
In Asia overnight Monday, stocks closed mostly higher, with
China's CSI 300 index rising 0.2%, Japan's Nikkei 225 adding 1% and
Hong Kong's Hang Seng index climbing 0.3%. European stocks rallied
1.1%, according to the Stoxx Europe .
(END) Dow Jones Newswires
July 23, 2019 16:29 ET (20:29 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.
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