Led by the Dow Jones Industrial Average, the U.S. stock market traded sharply higher on Tuesday after a fresh batch of earnings surprised to the upside, underscoring another solid quarter for corporate America.
DOW RECORDS STRONG GAINS
All of Wall Street’s major indexes booked solid gains through the morning session, mirroring a strong pre-market for U.S. stock futures. The Dow Jones Industrial Average rose 174 points, or 0.7%, to 25,413.73. The blue-chip index is on track for its highest settlement in two months. DowDuPont (DWDP), Intel Corp (INTC), and Apple Inc. (AAPL) were the Dow’s best performers, gaining at least 2% each.
The large-cap S&P 500 Index rose 0.5% to 2,737.70. Shares of Estee Lauder Companies Inc. (EL) and Ralph Lauren Corp (RL) led the broad index higher after reporting upbeat earnings for the December quarter. At the time of writing, both companies were up double-digits. The S&P 500’s consumer discretionary index rose 1%.
The Nasdaq Composite Index was on track for another solid trading session, having gained 0.8% to 7,406.75.
As of Friday, 46% of S&P 500 companies had reported fourth-quarter results. Among them, more than two-thirds (70%) reported better than expected earnings and 62% posted positive revenue surprises, according to FactSet.
Read about why earnings could be headed lower in Q1 2019.
STOCK MARKET AWAITS STATE OF THE UNION ADDRESS
U.S. President Donald Trump will deliver his second State of the Union address Tuesday evening. According to White House aides, the president will call for “an end to the politics of resistance and retribution,” which is a direct reference to the ongoing debate in Congress over border-security funding.
Trump’s State of the Union address was delayed by a historic government shutdown after Democrats refused to consider appropriations for a $5.7 billion steel barrier extension along the U.S.-Mexico border. The impasse was broken on Jan. 25 after Trump and congressional leaders agreed to a temporary stopgap spending bill. Although the current agreement is set to expire Feb. 15, lawmakers would like to finalize a more permanent extension this week to allow time for votes.
Trump will likely use the primetime address to talk up the economy after Friday’s better than expected nonfarm payrolls report. Employers added 304,000 workers to payrolls last month, far exceeding expectations. The December hiring pace was revised down from 312,000 to a still-robust 222,000.
Featured image courtesy of Shutterstock. Chart via TradingView.