U.S. Stocks Rise as Retailers and Smaller Companies Climb

After a weak start, U.S. indexes are climbing Tuesday as retailers and smaller companies rise and investors applaud strong second-quarter results from health care products giant Johnson & Johnson and financial services company Charles Schwab. Technology companies are rising as well. Netflix is falling as investors were disappointed with the streaming video company’s subscriber growth.

KEEPING SCORE: The S&P 500 index rose 12 points, or 0.5 percent, to 2,811 as of 1:45 p.m. Eastern time after it dropped 9 points at the start of trading. The Dow Jones Industrial Average gained 62 points, or 0.3 percent, to 25,126. The Nasdaq composite jumped 54 points, or 0.7 percent, to 7,860 and is on track to surpass its record high from last week. The Russell 2000 index of smaller-company stocks rose 11 points, or 0.7 percent, to 1,689.

SHOPPING, NOT DROPPING: Retailers contributed to the market’s recovery as PVH, the parent company of Tommy Hilfiger and other brands, gained 2.5 percent to $151.63; and Ralph Lauren rose 2.3 percent to $132.95. Companies that make and sell household goods also fared well. Pepsi gained 1.5 percent to $114.69, and Oreo maker Mondelez added 1.3 percent to $42.86.

Amazon rose as it said sales in the first hours of its annual Prime Day promotion improved compared to last year in spite of technical problems. The company said it’s resolving those issues. The stock rose 1.3 percent to $1,845.51.

BAND-AID: Johnson & Johnson’s second-quarter profit grew thanks to better results from its prescription drug business, and it posted higher sales than analysts expected. The stock gained 3.5 percent to $129.03, which helped household goods companies fare better than the rest of the market.

Charles Schwab climbed 3.2 percent to $52.59 after it surpassed Wall Street forecasts in the latest quarter.

TECH TURNAROUND: Technology companies resumed their position on top of the market and the Nasdaq composite was on track for another all-time high. Alphabet advanced 1.4 percent to $1,213.65 after an early loss. Microsoft rose 1.1 percent to $106.04.

INSURER GETS QUEASY: UnitedHealth, the largest U.S. health insurance company, once again beat expectations in the latest quarter and raised its annual profit forecast. But the company’s spending on medical costs was higher than analysts expected, and the stock lost 2.5 percent to $250.59.

Investors worried that other health insurers would have similar problems. Humana slid 1.1 percent to $312.30, and Anthem gave up 0.8 percent to $246.27.

Advertising companies also traded lower after Omnicom said its business in North America decreased in the second quarter and its U.K. business also shrank. The advertising conglomerate lost 9.6 percent to $70.63, and Interpublic Group shed 5.6 percent to $22.37.

Netflix’s weak subscriber totals sent the stock down 5 percent to $380.54. The company has regularly beaten its own subscriber forecasts but failed to do so in the second quarter, and its third-quarter estimate was lower than analysts expected.

Things looked far worse for Netflix in early trading as the stock plunged 14.1 percent Tuesday morning before recovering most of that drop. Even with Tuesday’s loss, the stock is up 98 percent this year.

FED COMMENT: Federal Reserve Chairman Jerome Powell delivered a positive view of the economy and told Congress that he expects the Fed to keep gradually raising interest rates. Powell said the Fed believes the economy will stay strong and inflation will remain at around 2 percent for the next few years.

EU-JAPAN DEAL: The European Union and Japan signed a broad trade deal Tuesday that will eliminate nearly all tariffs. Their agreement covers a third of the global economy and more than 600 million people. Prices of European wine and meat will fall for Japanese consumers. Japanese machinery parts, tea and fish will get cheaper for Europe. The deal has been in the works for years and contrasts with the more protectionist approach of U.S. President Donald Trump.

BONDS: Bond prices were little changed. The yield on the 10-year Treasury note remained at 2.86 percent.

ENERGY: Benchmark U.S. crude recovered an early loss and gained 0.5 percent to $68.37 a barrel in New York. Brent crude, used to price international oils, picked up 0.8 percent to $72.44 a barrel in London.

METALS: Metals prices continued to fall. Gold dripped 1 percent to $1,227.30 an ounce. Silver sank 1.2 percent to $15.62 an ounce. Copper fell 0.6 percent to $2.75 a pound. All three are near their lowest prices in a year.

CURRENCIES: The dollar rose to 112.86 yen from 112.30 yen. The euro fell to $1.1656 from $1.1714.

OVERSEAS: Germany’s DAX jumped 0.8 percent, and the CAC 40 in France added 0.2 percent. The British FTSE 100 index rose 0.3 percent.

Japan’s benchmark Nikkei 225 gained 0.4 percent after reopening from a public holiday. South Korea’s Kospi lost 0.2 percent and Hong Kong’s Hang Seng shed 1.3 percent.