Earnings Give U.S. Stocks a Boost
18 April 2018 - 7:54AM
Dow Jones News
By Riva Gold and Allison Prang
-- U.S. stock indexes rise
-- Asian tech under pressure following ZTE action
-- Stoxx Europe 600 climbs
U.S. stocks rose Tuesday, driven by strong corporate results,
extending Monday's rally and sending the Dow industrials back into
positive territory for 2018.
Major indexes have gained eight out of the past 11 trading
sessions, but volumes have been light, suggesting some investors
are remaining on the sidelines as geopolitical tensions simmer.
The Dow Jones Industrial Average climbed 213.59 points, or 0.9%,
to 24786.63, its highest close since March 16. The S&P 500
added 28.55 points, or 1.1%, to 2706.39, as 10 of the index's 11
sectors traded higher. The tech-heavy Nasdaq Composite rose 124.81
points, or 1.7%, to 7281.10. Those two indexes ended at their
highest levels since March 21.
The blue-chip index is up 0.3% for the year, while the S&P
500 has gained 1.2% and the Nasdaq Composite has risen 5.5%.
Helping boost sentiment, Netflix shares jumped $28.28, or 9.2%,
to $336.06 -- a record -- after the video-streaming service
reported subscriber growth that beat its own forecast. The stock is
by far the best performer in the S&P 500 this year with a gain
of 75%.
"The FANGs [Facebook, Amazon.com, Netflix and Google parent
Alphabet] are very important; they seem to be a barometer for all
stocks," said Christopher Peel, chief investment officer at
Tavistock Investments. In light of recent pressure on technology
companies, "the tech sector is vulnerable to a selloff if any of
the big five or six companies have a miss [on earnings]," he said.
Shares of the FANG companies each gained more than 2%.
Results from Netflix are also the first real gauge of whether
world-wide consumer demand picked up in the first quarter, said JJ
Kinahan, chief market strategist at TD Ameritrade. "You really want
to hear that tech stocks are doing well and seeing demand and
growth world-wide," he said.
Among other companies posting results, Goldman Sachs Group
shares fell 4.25, or 1.7%, to 253.63, after the bank said it
wouldn't buy back shares in the second quarter, though it reported
higher profit and revenue than expected. Goldman helped drive down
financial stocks in the S&P 500, which were the only sector in
the red, as Treasury yields also slumped.
Morgan Stanley will conclude earnings season for big U.S. banks
when it reports Wednesday morning.
Meanwhile, UnitedHealth Group, the biggest U.S. health insurer,
rose 8.23, or 3.6%, to 238.55, after reporting a 31% increase in
earnings and lifting its profit outlook for the year. Johnson &
Johnson shares fell 1.22, or 0.9%, to 130.54, after the company
increased its sales guidance but not its profit estimates.
Dan Morgan, senior portfolio manager at Synovus Trust, said it
is time for the market to focus on the fundamentals rather than
negative possibilities like effects from tariffs or legislation
against Facebook.
"You're just starting to see the beginning" of a solid first
quarter, he said.
Still, many analysts expect the earnings season to offer only a
limited boost to the equity market in light of high expectations
and continued uncertainty about trade and tensions around Russia
and Syria.
"The early take is things are good...but there's a lot of
nervousness going forward because the geopolitical scene is a
constantly changing one," Mr. Kinahan said.
Elsewhere, the Stoxx Europe 600 added 0.8%, and the
multinational-heavy FTSE 100 edged up 0.4% after grappling with a
strengthening British pound to start the week.
Chinese technology shares fell sharply after the U.S. Commerce
Department banned American companies from selling products to ZTE,
a telecom-equipment company in China, saying the company violated
the terms of a deal last year settling allegations of
sanctions-busting involving North Korea and Iran.
Hong Kong's Hang Seng Index fell 0.8%, while the Shanghai
Composite Index closed down 1.4% at its lowest level since May
2017.
Write to Riva Gold at riva.gold@wsj.com and Allison Prang at
allison.prang@wsj.com
(END) Dow Jones Newswires
April 17, 2018 17:39 ET (21:39 GMT)
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