By Sara Sjolin, MarketWatch , Ryan Vlastelica
Investors keep eye on bond yields; Alphabet sinks after
results
U.S. stocks rose on Tuesday, with the Dow poised to snap a
four-day skid as strong corporate earnings supported sentiment,
although rising bond yields caused investors to assess borrowing
costs for U.S. corporations.
What are markets doing?
The Dow Jones Industrial Average rose 90 points, or 0.4%, to
24,540. The S&P 500 was up 11 points to 2,681, a gain of 0.4%.
The Nasdaq Composite Index was up 30 points, or 0.4%, to 7,159.
The day's gains were broad, with nine of the 11 primary S&P
500 sectors higher on the day. Among the notable gainers were
technology shares, which rose 0.5%, and consumer-discretionary
stocks, up 0.5%.
What is driving the market?
Stocks have been whipped around by rising U.S. bond yields
recently, as the 10-year rate touched the psychologically important
3% handle
(http://www.marketwatch.com/story/10-year-us-government-bond-yield-touches-30-level-2018-04-24).
Higher bond yields tend to weigh on stocks because they push up
borrowing costs for corporate. Yields and debt prices move in
opposite directions.
Earnings were also a major focus on Tuesday, with a deluge of
high profile companies reporting results before the open. The
season has so far been strong, and more than 80% of the S&P 500
companies reporting so far have beaten profit forecasts. That
compares with the fourth quarter of 2017, when around 73% of
S&P companies topped estimates, according to FactSet data.
What are strategists saying?
"Crossing 3% on the 10-year is something that will certainly
raise concerns, but at this stage of the cycle, higher yields
aren't antithetical to rising stock prices. For the time being I
think we're fine, but we're certainly keeping an eye on the yield
curve, especially if the Fed becomes more aggressive," said Bruce
McCain, chief investment strategist at Key Private Bank.
"Ultimately earnings remain the primary driver, along with the fact
that the economy is still in pretty good shape.
Hussein Sayed, chief market strategist at FXTM, said that "the
3% by itself is just a psychological level and not a significant
threat, but if a break above leads to further selling in Treasury
bonds, that's going to be a serious warning signal for equity
bulls. With a current world running on A.I and algorithms, a
selloff may look ugly."
What stocks are in focus?
Earnings were in focus with six Dow components reporting results
on Tuesday. While results were largely positive, stock prices
generally saw tepid or negative reactions, a sign that even strong
earnings haven't been enough to excite investors.
United Technologies Corp.(UTX) raised its guidance for the full
year
(http://www.marketwatch.com/story/united-tech-shares-jump-almost-3-premarket-after-earnings-top-estimates-2018-04-24)
after releasing first-quarter earnings that blew past estimates.
The stock rose 1.9%.
Coca-Cola Co.(KO) reported earnings that slightly beat
expectations, but the stock fell 1.3%.
Caterpillar Inc.(CAT) surged 3.5% after the maker of
construction and mining equipment reported first-quarter profit and
sales
(http://www.marketwatch.com/story/caterpillars-stock-surges-after-profit-and-sales-beat-raised-outlook-2018-04-24)
that were well above expectations.
Shares of Alphabet Inc.(GOOGL) (GOOGL) sank 2.4% even after the
Google parent late Monday reported earnings ahead of analyst
estimates
(http://www.marketwatch.com/story/alphabet-stock-rises-after-earnings-beat-2018-04-23).
Travelers Cos. Inc.(TRV) lost 3.7% before the open after its
first-quarter earnings missed forecasts
(http://www.marketwatch.com/story/travelers-stock-slips-on-earnings-miss-2018-04-24).
3M Co.(MMM) fell more than 5.3% on Tuesday as the company
reported earnings in line with estimates, but said its full-year
earnings would be lower than previously expected
(http://www.marketwatch.com/story/3m-reports-in-line-earnings-but-guides-lower-for-the-year-2018-04-24).
Verizon Communications Inc.'s (VZ) stock rose 1.4% after the
company announced better-than-expected results
(http://www.marketwatch.com/story/verizon-stock-gains-after-revenue-earnings-beat-2018-04-24)for
its March quarter.
Freeport-McMoRan Inc. (FCX) fell 4% after the company reported
first-quarter earnings and revenue that missed expectations
(http://www.marketwatch.com/story/freeport-mcmoran-earnings-fall-short-of-estimates-2018-04-24).
Eli Lilly & Co.(LLY) rose 1.1% after raising its 2018 profit
guidance
(http://www.marketwatch.com/story/eli-lilly-raises-2018-profit-view-after-quarterly-earnings-sales-beat-expectations-2018-04-24).
Read: Google made a lot more profit, and spent a LOT more
money--here's why
(http://www.marketwatch.com/story/google-made-a-lot-more-profit-and-spent-a-lot-more-moneyheres-why-2018-04-23)
Harley-Davidson Inc.(HOG) reported revenue and earnings that
came in above analyst expectations
(http://www.marketwatch.com/story/harley-davidson-expects-ramp-up-overseas-2018-04-24).
Shares were up 0.1%.
PulteGroup Inc. (PHM) gained 4.5% after reporting strong
first-quarter results.
Sanmina Corp.(SANM) rallied 22% after the electronics maker late
Monday reported profit and sales above Wall Street estimates
(http://www.marketwatch.com/story/sanmina-shares-skyrocket-15-after-company-beats-earnings-2018-04-23).
U.S.-listed shares of SAP AG(SAP.XE) (SAP.XE) climbed 4.5% after
the German software giant raised its outlook for 2018
(http://www.marketwatch.com/story/sap-lifts-outlook-on-callidus-deal-strong-quarter-2018-04-24)
to reflect the acquisition of Callidus Software Inc. and a strong
first-quarter operating performance.
What economic data are in focus?
The S&P/Case-Shiller national index rose a seasonally
adjusted 0.5%
(http://www.marketwatch.com/story/home-prices-surge-to-a-near-four-year-high-case-shiller-shows-2018-04-24)
and was up 6.3% compared with a year ago in February, hitting a
four-year high.
U.S. consumer confidence index rose to 128.7 in April from 127,
while new-home sales were at a seasonally adjusted annual rate
(http://www.marketwatch.com/story/new-home-sales-roar-to-a-4-month-high-in-march-2018-04-24)
of 694,000 in March, Commerce Department says.
See:MarketWatch's economic calendar
(http://www.marketwatch.com/economy-politics/calendars/economic)
What are other markets doing?
Asian markets closed mostly higher, with Chinese stocks getting
a lift from the government announcing deeper economic and market
reforms
(http://www.marketwatch.com/story/weaker-yen-boosts-nikkei-as-other-asian-markets-mixed-2018-04-23).
Stocks in Europe are also trading higher
(http://www.marketwatch.com/story/european-stocks-hold-at-2-month-highs-as-energy-names-rally-2018-04-24),
with the Stoxx Europe 600 index up 0.1%.
Oil prices continued to advance, with Brent breaking above $75 a
barrel
(http://www.marketwatch.com/story/brent-oil-breaks-above-75-on-fears-iran-sanctions-are-looming-2018-04-24)
and trading around its highest level since November 2014.
Gold rose , while the ICE U.S. Dollar Index was flat.
(END) Dow Jones Newswires
April 24, 2018 10:11 ET (14:11 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.