Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., October 12, 2018. REUTERS/Brendan McDermid
October 16, 2018
By Medha Singh
(Reuters) – The three main Wall Street indexes rose more than 1 percent on Tuesday as upbeat earnings from blue-chips such as Johnson & Johnson and Goldman Sachs eased jitters over the impact of rising interest rates and tariffs on corporate profits.
All the 11 major S&P sectors were higher, with nine of them up at least 1 percent. Technology stocks, which led the market selloff last week, and health stocks jumped more than 2 percent.
Insurer UnitedHealth rose 3.7 percent and J&J 1.7 percent after the two Dow components topped estimates for quarterly profit and boosted their earnings forecast for the year.
Morgan Stanley rose 4.5 percent and Goldman Sachs 1.6 percent after they wrapped up earnings from the top six U.S. lenders with better-than-expected quarterly profits.
Walmart gained 2.1 percent after saying it expects U.S. online sales to jump about 40 percent this fiscal year and that profitability in the business was in “good shape”. The stock had fallen earlier after the retailer cut its profit forecast.
Healthy earnings from some of the biggest U.S. companies will help soothe nerves of investors who have been fretting over the impact of tariffs, rising interest rates and wages on corporate profits. Those fears, along with a spike in Treasury yields last week, led to a selloff.
“The pullback last week gave everyone an opportunity for some tremendous entry points into really solid companies,” said Kevin Miller, chief investment officer at E-Valuator funds in Minneapolis, Minnesota.
“I don’t think the outlook is going to be as tainted as people anticipate. I anticipate we’re going to end this quarter on a high note.”
Earnings at S&P 500 companies are expected to have risen 21.8 percent in the third quarter, a slowdown from the past two quarters, according to I/B/E/S data from Refinitiv.
At 11:29 a.m. EDT the Dow Jones Industrial Average was up 364.16 points, or 1.44 percent, at 25,614.71, the S&P 500 was up 40.50 points, or 1.47 percent, at 2,791.29 and the Nasdaq Composite was up 138.32 points, or 1.86 percent, at 7,569.07.
Adobe climbed 8.2 percent, helping ease turbulence in the technology sector, after the software company reaffirmed its current-quarter forecast and provided 2019 targets that allayed concerns over the impact of a recent acquisition.
Netflix rose 1.1 percent ahead of its earnings report, expected after the bell. The video streaming company will be the first to issue results among the high-flying FAANG group of stocks, which were at the center of last week’s selloff.
One dampener was W.W. Grainger, which tumbled 12 percent after the industrial product distributor posted disappointing quarterly revenue and warned of higher costs from Chinese tariffs.
Advancing issues outnumbered decliners by a 4.75-to-1 ratio on the NYSE and a 2.91-to-1 ratio on the Nasdaq.
The S&P index recorded three new 52-week highs and seven new lows, while the Nasdaq recorded nine new highs and 50 new lows.
(Reporting by Medha Singh in Bengaluru; Editing by Anil D’Silva)
