U.S. stocks spiked to record highs as a result of corporate earnings boosting sentiment despite lingering concerns regarding inflation and growth.
The S&P 500 and Dow Jones Industrial Average reached all-time high as Tuesday’s round of earnings commenced. United Parcel Service Inc. and General Electric Co. gained after a strong performance. Facebook Inc. saw a drop as its pledge to buy back more shares and raise spending on digital offerings was offset by a revenue miss. Big-tech firms including Twitter Inc., Alphabet Inc., and Microsoft Inc. are reporting after the close of regular trading.
Investment strategy analyst at Baird Ross Mayfield said, “I don’t think anybody’s too worried about the big tech names. Their performances are all incredibly strong in absolute standards that the bar is just so high for them at this point that it can be harder to meet expectations.”
The Stoxx Europe 600 index also saw an increase of 0.8% and closed at n all-time high. Reckitt Benckiser Group Plc gained after the maker of Strepsils throat lozenges spiked its sales forecast and Novartis AG advanced on news it may spin off its generic-drug unit.
The 10-year U.S. Treasury yield dropped while the dollar gained. The debate over price pressures continues as former Treasury Secretary Lawrence Summers said that officials are unlikely to deal with “inflation reality” successfully until it’s fully recognized.
Portfolio strategy director, Verdence Capital Advisors Megan Horneman said, “We’re coming off a 40-plus-year bond-bull market. And right now we’re looking at interest rates that should be a lot higher from here. So with duration, as high as it is in the fixed income market, you have to be very cautious around fixed income.”
Earnings season is aiding in easing concerns that elevated inflation and tightening monetary policy will slow the post-pandemic recovery. Around 81% of S&P 500 members have reported better-than-expected results so far, though Citigroup Inc. warned that profit growth may be close to peaking.
WTI crude oil traded higher than $84 a barrel as investors weighed the outlook for U.S. stockpiles and prospects for talks that could help revive an Iranian nuclear accord, allowing a pickup in crude exports.
