NEW YORK, Oct 16 ― Wall Street jumped yesterday as third-quarter reporting season kicked into high gear with a spate of upbeat earnings reports that brought buyers back to the equities market.
All three major US stock indexes touched three-week highs, gaining more than 1 per cent in a broad-based rally.
“It's all going to be about earnings for the next couple of weeks and that's a good thing,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. “These early beats are a very positive sign.”
Even so, Pursche warned that global headwinds persist.
“We're likely to see corporate earnings and monetary policy helping to lift stocks, while geopolitical events will put pressure on stocks,” Pursche said. “As such, we'll probably be in this trading range for some time.”
On the geopolitical front, investors welcomed news that Britain and the European Union could reach a deal in time for a leaders' summit this week.
Major financial firms JPMorgan Chase & Co, Citigroup Inc, Goldman Sachs Group Inc and Wells Fargo & Co all posted results, as did healthcare giants Johnson & Johnson and UnitedHealth Group Inc.
Among the big banks, JPMorgan Chase stock hit a record high after it handily beat estimates on bond trading and underwriting strength. Its shares were last up 3.6 per cent.
Citigroup rose 2.0 per cent following its profit beat.
Wells Fargo results were less upbeat, as its profit slid 26 per cent due to sinking mortgage income and legal costs. Goldman Sachs' profit miss was attributed to weak underwriting. Wells Fargo rose 2.8 per cent, while Goldman gained 1.0 per cent.
Prescription drug sales helped drive Johnson & Johnson's upside surprise, while UnitedHealth raised its 2019 guidance on pharmacy benefit growth. Their shares were up 1.9 per cent and 8.2 per cent, respectively.
Analysts currently expect S&P 500 third-quarter earnings to have contracted by 3 per cent from last year, down from the 12.1 per cent growth seen a year ago, according to Refinitiv data.
Of the 34 S&P 500 companies that have reported so far, 88.2 per cent have come in above consensus estimates.
The Dow Jones Industrial Average rose 292.98 points, or 1.09 per cent, to 27,080.34, the S&P 500 gained 35.49 points, or 1.20 per cent, to 3,001.64 and the Nasdaq Composite added 114.98 points, or 1.43 per cent, to 8,163.63.
Among the 11 major sectors in the S&P 500, eight were in the black, with healthcare, communications services and financials enjoying the largest percentage gains.
Blackrock Inc, the world's largest asset manager, beat analyst estimates on strong inflows into its fixed income and cash management business, sending its stock up 2.7 per cent.
In other news, shares of Roku Inc surged 10.8 per cent after the announcing Apple Inc's TV app was available on its platform and Apple TV+ would be available after it was launched.
Bank of America, expected to post results today, rose 2.8 per cent after a Bloomberg report that Warren Buffett' Berkshire Hathaway was seeking permission from the Federal Reserve to boost his stake in the bank above 10 per cent.
Advancing issues outnumbered declining ones on the NYSE by a 2.28-to-1 ratio; on Nasdaq, a 2.92-to-1 ratio favoured advancers.
The S&P 500 posted 16 new 52-week highs and no new lows; the Nasdaq Composite recorded 36 new highs and 62 new lows. ― Reuters
