U.S. stocks closed higher Tuesday as investors continued to brush aside anxiety over the trade war between the U.S. and China and instead focus on positive corporate earnings.
The Nasdaq rose for a sixth day in a row, its longest winning streak since March, led by Tesla Inc., which spiked following a tweet from Chief Executive Elon Musk that he was considering a move to take the company private, which was followed by confirmation from the company.
How did the main benchmarks fare?
The S&P 500 index
rose 8.05 points, or 0.3%, to 2,858.45, gaining for a fourth session in a row as energy and industrial sectors led. The benchmark index is only 0.5% below its record close of 2,872.87 reached on Jan. 26.
The Nasdaq Composite Index
gained 23.99 points, or 0.3%, to 7,883.66, while the Dow Jones Industrial Average
advanced for a third session, adding 126.73 points, or 0.5%, to 25,628.91.
The CBOE Volatility Index
, known as Wall Street’s fear index, is near its lowest levels of 2018 at 10.97. The gauge, which reflects bullish and bearish bets on the S&P 500 in the coming 30 days, tends to fall as stocks rise.
What drove the market?
Second-quarter results so far have been stellar, with S&P 500 companies reporting earnings growth of 24% and sales gains of 9.8%, according to FactSet. Strong earnings have helped to bolster the belief that steady U.S. economic growth will continue to support corporate bottom lines and keep stocks buoyant.
Trade worries have been put on the back burner for now even as China shot off another verbal volley against the U.S. via one of its newspapers. A late Monday editorial in China’s People’s Daily declared the country won’t give in to “trade blackmail.” China threatened to place tariffs on $60 billion of American goods last week if the White House goes ahead with its plans to impose new levies on Chinese products.
On the economic-data front, the latest report from the Labor Department showed there were 6.66 million job openings at the end of June, up fractionally from May’s levels and the third highest in history.
What were market participants saying?
Tony Dwyer, an equity strategist at Canaccord Genuity, said in a report that the market has more upside potential. “With volatility back to the low, the S&P 500 in close proximity to record highs … there is much discussion about how long the current economic and market cycle can last. We believe the combination of a solid economic backdrop, historically high business and consumer confidence, and better-than-expected earnings growth continues to suggest there is a long way to go,” he said.
“The strong earnings season has been the key factor lifting U.S. stocks,” said Hussein Sayed, chief market strategist at FXTM, in a note. Sayed estimated that earnings grew 24.1% and more than 79% of S&P 500 companies have managed to beat profit forecasts, in what he described as the best earning season in recent history.
“However, as we get closer to the end of company announcements, the focus will return to trade frictions, geopolitics and the forthcoming U.S. midterm elections,” he said.
Check out: MarketWatch’s Economic Calendar
Which stocks were in focus?
soared 11% to close at $379.57. Musk said he is considering taking the car maker private at $420 a share and even indicated that he had financing lined up, although some Tesla watchers are questioning the veracity of that claim.
Am considering taking Tesla private at $420. Funding secured.
— Elon Musk (@elonmusk) August 7, 2018
Shares of Zillow Group Inc.
sank 15% after the company late Monday posted earnings and announced its acquisition of a mortgage lender.
Marriott International Inc. shares
dropped 3.8% after the hotel chain’s second-quarter revenue fell short of expectations.
trimmed earlier gains but still added 3.3% after it raised its revenue outlook.
Office Depot Inc.
reported profit and sales that were better than expected, with its results helping to send shares up 14%.
Discovery Inc. shares
dropped 5.1% after the company reported second-quarter earnings that missed expectations but revenue that beat, boosted by a doubling in U.S. networks.
Dean Foods Co.
plummeted 15% after the food and beverage company beat second-quarter earnings and sales expectations but slashed its full-year profit outlook.
What were other markets doing?
The U.S. benchmark West Texas Intermediate futures
settled marginally higher, while the U.S. Dollar Index
The global strength in equities wasn’t lost on Europe
, where the Stoxx Europe 600 joined in with a gain of 0.6%. Asian stocks got in rally mode with a sharp rebound for the Shanghai Composite
, which climbed 2.7%.
Barbara Kollmeyer contributed to this report.
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