U.S. Stocks Back to Records as Corporate Profits Keep Rising

NEW YORK (AP) -
The New York Stock Exchange. (AP Photo/Mark Lennihan, File)

U.S. stock indexes returned to record heights Tuesday, as corporate profits continued to come in better than analysts expected. McDonald’s and Caterpillar were among the big companies reporting healthier-than-forecast earnings.

Higher prices for oil, metals and other commodities helped to lift energy and raw-materials companies, while tech stocks took a rare turn lagging the rest of the market after results for Seagate Technology and others in the industry fell short of expectations.

Treasury yields rose as the Federal Reserve begins a two-day meeting on interest-rate policy.

KEEPING SCORE: The Standard & Poor’s 500 index rose nearly 10 points, or 0.4 percent, to 2,480 as of 2 p.m. Eastern time. If the gain holds, it would be the first for the index in four days and return it to an all-time high.

The Dow Jones industrial average added 131 points, or 0.6 percent, to 21,644. The Nasdaq composite added 12 points, or 0.2 percent, to 6,422 after it closed at a record high Monday.

The Russell 2000 index of small-cap stocks rose 13, or 0.9 percent, to 1,451, which would also mark an all-time high.

EARTH MOVING: Caterpillar jumped $6.32, or 5.8 percent, to $114.50 after reporting better results for the latest quarter than analysts expected. It also raised its forecast for revenue and profit for the full year, citing increased demand across many of its markets.

PILING HIGHER: McDonald’s rose $7.72, or 5.1 percent, to $159.57 after its revenue and earnings for the latest quarter topped Wall Street’s forecast.

TECH STUMBLE: Technology stocks have been the year’s biggest stars so far, as investors have been hungry for anything with the potential to grow quickly in a slow-growing global economy.

But tech stocks in the S&P 500 edged backward after several reported results that fell short of expectations.

Seagate Technology sank $6.26, or 15.7 percent, to $33.50 after the maker of hard drives and other electronic data storage reported weaker revenue and earnings than analysts had forecast.

MORE ENERGETIC: The price of crude was on track to rise by more than 1 percent for a second straight day, and shares of oil producers and other energy companies benefited.

Energy stocks in the S&P 500 rose 1.3 percent, tied for most among the 11 sectors that make up the index. Devon Energy rose $1.29, or 4.1 percent, to $33.03, and Marathon Oil rose 44 cents, or 3.7 percent, to $12.32.

Benchmark U.S. crude rose $1.39, or 3 percent, to $47.73 per barrel. Brent crude, the international standard, rose $1.30, or 2.7 percent, to $50.12 a barrel.

COMMODITIES: Metals prices also climbed, which helped to lift shares of mining companies and other raw-material producers.

Copper jumped 11 cents, or 4 percent, to $2.85 per pound, while silver rose 10 cents to $16.54 per ounce and gold slipped $2.20 to $1,252.10 an ounce.

YIELDS: The yield on the 10-year Treasury note rose to 2.31 percent from 2.26 percent late Monday. The two-year yield climbed to 1.38 percent from 1.36 percent, and the 30-year yield rose to 2.90 percent from 2.83 percent.

FINANCIAL STRENGTH: Banks and other companies in the financial industry were strong following the rise in yields. Higher interest rates can help banks make bigger profits through lending. Financial stocks in the S&P 500 rose 1.3 percent.

FED MEETING: The Federal Reserve’s policymaking committee is beginning a two-day meeting, but investors expect to see few fireworks when it announces its decision on interest rates Wednesday.

The central bank has already raised rates three times since December, and most investors expect the next rate increase to come later this year or in 2018.

CALM SAILING: The stock market has been unusually calm recently, been able to shrug off a series of potential stumbling blocks to push to record after record. Much of the market’s recent climb has been due to expectations that corporate earnings will keep climbing, and analysts are looking for particularly big growth from companies in the energy, financial and technology industries.

Such calmness has some investors anticipating a turn. More normal levels of volatility may be on the way because the Federal Reserve is slowly heading in the opposite direction of stimulating the economy, and earnings expectations for some companies may prove to be too high.

“There’s a lot of hope built into the market at current levels,” said Rob McIver, portfolio manager at the $6.3 billion Jensen Quality Growth fund. “We’re cautioning investors to be cautious and conservative.”

CURRENCIES: The euro rose to $1.1660 from $1.1645 late Monday. The dollar inched up to 111.63 Japanese yen from 111.11 yen, and the British pound rose to $1.3044 from $1.3036. The ICE US Dollar Index is at its lowest level in a year.

MARKETS ABROAD: France’s CAC 40 climbed 0.7 percent, Germany’s DAX gained 0.5 percent and the FTSE 100 in London rose 0.8 percent.

Japan’s Nikkei 225 index slipped 0.1 percent, South Korea’s Kospi index dipped 0.5 percent and the Han Seng in Hong Kong was virtually flat.