Stocks closed slightly higher on Wall Street Tuesday, erasing the market’s modest losses from a day earlier.
The gains, which followed a rally in overseas stock indexes, came as investors sized up the latest batch of company earnings reports.
Financial stocks led the way higher as bond yields rose, which drives interest rates higher, enabling banks to make more money on loans. BlackRock and Progressive led the sector after each company reported solid quarterly results.
Qualcomm powered technology sector stocks higher, notching its best day in 20 years, on news the chipmaker and Apple settled their bitter legal dispute.
Investors are looking to the latest wave of corporate earnings reports over the next few weeks for clues about the health of the global economy and the prospects for company profits this year.
Analysts expect the first-quarter results for S&P 500 companies overall to be the weakest in nearly three years.
“The markets are prepared for this year-over-year decline that everyone is expecting in earnings,” said Erik Davidson, chief investment officer at Wells Fargo Private Bank. “Unless we have some significant misses, we should be doing OK.”
The S&P 500 rose 1.48 points, or 0.1%, to 2,907.06. The Dow Jones Industrial Average gained 67.89 points, or 0.3%, to 26,452.66. The Nasdaq composite gained 24.21 points, or 0.3%, to 8,000.23. The index had not closed above 8,000 points since October.
The Russell 2000 index of small-cap stocks picked up 3.62 points, or 0.2%, to 1,582.79.
Overseas stock indexes rallied on upbeat economic data from China and Germany. Markets in Asia and Europe finished higher.
U.S. stocks have had a torrid start to the year after the Federal Reserve said it may not raise interest rates at all in 2019. The benchmark S&P 500 remains within 0.8% of its most recent all-time high on September 20.
“Investors should take some comfort, because we have over those six months seen some pretty significant earnings growth and we’re likely to continue to see it.” Davidson said.
What investors take away from the slew of company earnings reports over the next few weeks will likely be a key driver of the market’s move from here.
Analysts expect companies in the S&P 500 to report a 2.9% drop in earnings per share for the first quarter versus a year earlier, which would be the first decline since the spring of 2016. The expected decline is due almost entirely to weaker profit margins.
Banks kicked off the latest quarterly reporting season last week with mixed results. Analysts expect the first-quarter results for S&P 500 companies overall to be the weakest in nearly three years.
Companies that posted encouraging results helped put traders in a buying mood Tuesday.
Progressive jumped 6.9% after the insurer’s latest quarterly results topped analysts’ forecasts. BlackRock gained 3.2% after the investment firm reported first quarter profit that surged past Wall Street forecasts as a rebounding market helped to increase assets.
Bank of America inched 0.1% higher after the nation’s second-largest bank reported strong earnings growth, but gave a weak forecast for net interest income, a key performance metric for banks.
UnitedHealth Group, the nation’s largest health insurance company, reported first-quarter results that exceeded analysts’ expectations and raised its estimates for the full year. But cautious comments from management during a conference call with analysts weighed on the stock, which slumped 4%, giving up an early gain.
Other health insurers also fell. HCA Health care slumped 10%. Cigna slid 7.8% and Anthem lost 6.8%.
Johnson & Johnson bucked the broader declines in the health=care sector. Shares in the world’s biggest maker of health=care products rose 1.1% after the company’s first-quarter results topped Wall Street’s forecasts, even after its profit slumped 14% following a decline in sales overseas and higher costs for research and litigation.
JB Hunt Transport Services fell 4.9% after the trucking and logistics company’s first quarter profit and revenue fell short of analysts’ expectations.
Qualcomm shares surged 23.2% after the chipmaker and Apple settled their bitter financial dispute centered on some of the technology that enables iPhones to connect to the internet.
The deal requires Apple to pay Qualcomm an undisclosed amount. It also includes a six-year licensing agreement that likely involves recurring payments to the mobile chip maker.
The surprise truce announced late Tuesday afternoon came just as the former allies turned antagonists were facing off in a federal court trial that was supposed to unfold over the next month in San Diego. The resolution abruptly ended that trial, which also involved Apple’s key iPhone suppliers.
Scientific Games climbed 8% on news that the maker of betting machines and technology is partnering with Wynn Resorts to help develop digital sports betting and gambling. Wynn added 2.%.
The yield on the 10 year Treasury note rose to 2.59% from 2.55% late Monday. The 10 year Treasury yield has been climbing since late last month, when it fell to 2.37% amid a crescendo of worries that global economic growth was slowing.
Energy futures finished mostly higher. Benchmark U.S. crude oil rose 1% to settle at $64.05 per barrel. Brent crude, the international standard, added 0.8% to close at $71.72 per barrel.
Wholesale gasoline gained 1% to $2.03 per gallon, while heating oil picked up 1% to $2.08 per gallon. Natural gas slipped 0.7% to $2.57 per 1,000 cubic feet.
Gold fell 1.1% to $1,277.20 per ounce, silver dropped 0.4% to $14.92 per ounce and copper slipped 0.2% to $2.93 per pound.
The dollar fell to 111.99 Japanese yen from 112.03 yen late Monday. The euro weakened to $1.1288 from $1.1304.