By Chris Matthews and William Watts, MarketWatch
UnitedHealth jumps 8% to lead Dow, S&P 500 gainers
U.S. stocks finished at more-than-three-week highs Tuesday, as
investors cheered a raft of largely upbeat corporate earnings
reports, while considering the implications of a partial U.S.-China
trade deal announced last Friday and the possibility of a
breakthrough in Brexit negotiations.
How did major benchmarks perform?
The Dow Jones Industrial Average rose 237.44 points, or 0.9%, to
end at 27,024.80, while the S&P 500 index gained 29.53 points,
or 1%, to finish at 2,995.68. The Nasdaq Composite Index advanced
100.06 points, or 1.2%, to close at 8,148.71.
The gains saw the Dow and S&P 500 turn higher for the month,
with the blue-chip gauge up 0.4% since the end of September and the
S&P up 0.6% over the same stretch. The Nadaq added to its
month-to-date gain, up 1.9%.
The S&P 500 ended about 1% below its record close of
3,025.86 set on July 26, while the Dow Jones Industrial Average
closed around 1.2% below its record finish of 27,359.16 set on July
15, and the Nasdaq Composite finished around 2.3% away from its
record close of 8,330.21 scored on July 26.
Read:5 prominent U.S. companies are most at fault for the
earnings recession
(http://www.marketwatch.com/story/5-prominent-us-companies-are-most-at-fault-for-the-earnings-recession-2019-10-14)
What's driving the market?
The third-quarter U.S. corporate earnings reporting season
kicked off Tuesday with results from the nation's largest banks,
reflecting a relatively healthy U.S. consumer and a more wary
business sector.
Shares of JPMorgan Chase & Co. (JPM) rose 3% after reporting
revenue and earnings
(http://www.marketwatch.com/story/jp-morgan-chase-beats-profit-and-revenue-expectations-stock-rallies-2019-10-15)
that rose more than expected on the back of its consumer banking
division, while Wells Fargo & Co.(WFC)was also up after it
reported a surprise increase in revenue
(http://www.marketwatch.com/story/wells-fargos-stock-falls-after-profit-miss-but-revenue-surprises-to-the-upside-2019-10-15),
though its third-quarter profits fell more than expected.
Citigroup Inc.(C) shares gained 1.4% after reporting quarterly
sales and profits that beat expectations, while Goldman Sachs Group
Inc. (GS)(GS) reported a steep 26% decline in profit
(http://www.marketwatch.com/story/goldman-profit-falls-26-as-market-wobbles-2019-10-15)
from the year ago period, reflecting weakness in the mergers and
acquisitions market and debt and equity underwriting. Goldman
shares rose 0.3%.
UnitedHealth Group Inc. (UNH) provided Tuesday's most impressive
earnings release, after earnings and revenue came in above
expectations
(http://www.marketwatch.com/story/unitedhealths-stock-jumps-after-earnings-rise-above-expectations-and-guidance-raised-2019-10-15)
and after the health-care services company raised its full-year
outlook. Shares rallied 8.2%, pacing gains for the Dow and S&P
500.
"First the fears with China have been alleviated, now it looks
like Brexit negotiations are all but signed, sealed and delivered,"
MUFG chief economist Chris Rupkey said. "One by one the major
global risks to U.S. economic growth are falling by the wayside
which gives investors the green light to back up the truck and buy
lots of stocks."
Read: Goldman loses its Wall Street luster as earnings
disappoint, UnitedHealth's stock soars toward record price gain
(http://www.marketwatch.com/story/goldman-loses-its-wall-street-luster-as-earnings-disappoint-unitedhealths-stock-soars-toward-record-price-gain-2019-10-15)
However, S&P 500 corporate earnings are expected to fall
4.6% in the third quarter, according to FactSet. This would be the
first time that index company earnings have fallen for three
straight quarters since the fourth of quarter of 2015 through the
second quarter 2016, according to FactSet analyst John Butters.
However, corporate buybacks are again seen supporting earnings per
share.
"Corporate America is unlikely to deliver much, if any, earnings
growth in the third quarter," said John Lynch, chief investment
strategist at LPL Financial. "However, we think better days lie
ahead. We expect progress on trade to keep U.S. economic growth at
or above the trend for the current economic expansion. The
U.S.-China trade conflict is unlikely to be resolved anytime soon,
but we believe any small steps forward could increase business
confidence and spark capital investment, lifting corporate
profits."
Check out:Banks look to put earnings recession in revers, but
aren't expected to succeed ()
Enthusiasm over a U.S.-China trade deal boosted stocks at the
end of last week, but analysts said a lack of detail around planned
tariff increases and other elements damped enthusiasm, leaving
stocks to drift lower on Monday.
Speaking with reporters in London, St. Louis Fed President James
Bullard said investors might be too optimistic about how long it
takes to reach trade deals
(http://www.marketwatch.com/story/bullard-says-pandoras-box-has-been-opened-on-trade-that-will-take-a-long-time-to-resolve-2019-10-15).
Bullard dissented last month
(http://www.marketwatch.com/story/feds-bullard-dissent-was-due-in-part-to-worries-about-slowing-economy-2019-09-20)
from the Federal Reserve's decision to cut interest rates by a
quarter point, calling instead for half-point decrease.
In its World Economic Outlook, published Tuesday
(http://www.marketwatch.com/story/imf-sees-global-economic-growth-falling-to-3-this-year-slowest-pace-since-2008-financial-crisis-2019-10-15),
the IMF sees global economic growth falling to 3% this year, the
slowest pace since the 2008 financial crisis.
Meanwhile, European stocks on Tuesday rallied on optimism over
the possibility of a last minute deal for an agreed Brexit pact
(https://www.wsj.com/articles/eus-barnier-says-brexit-deal-is-still-possible-this-week-11571124007)
(https://www.wsj.com/articles/eus-barnier-says-brexit-deal-is-still-possible-this-week-11571124007).
T
(https://www.wsj.com/articles/eus-barnier-says-brexit-deal-is-still-possible-this-week-11571124007)he
Stoxx Europe 600 ended 1.1% higher at 394.02, its best level since
May 22, 2018.
Read: Pound surges on report of possible draft Brexit deal
(http://www.marketwatch.com/story/pound-surges-on-report-of-possible-draft-brexit-deal-2019-10-15)
Which stocks are in focus?
Dow constituent Johnson & Johnson(JNJ) reported earnings and
revenue that rose more than Wall Street estimates
(http://www.marketwatch.com/story/johnson-johnson-shares-rise-after-earnings-beat-estimates-company-raises-guidance-2019-10-15),
while the company raised its full-year guidance. Shares rose
1.6%.
Shares of BlackRock Inc.(BLK) gained 2.4% after reporting a
smaller-than-expected fall
(http://www.marketwatch.com/story/blackrock-profit-slips-8-in-q3-2019-10-15)
in profit.
How are other markets trading?
The yield on the 10-year U.S. Treasury note rose to 1.754%
(http://www.marketwatch.com/story/treasury-yields-tumble-as-investors-cut-back-trade-deal-expectations-2019-10-15)
from 1.748% late Friday. Bond markets were closed Monday for the
Columbus Day holiday.
In commodities markets, West Texas Intermediate crude fell 78
cents, or 1.5%,
(http://www.marketwatch.com/story/oil-weaker-but-pares-decline-2019-10-15)to
$52.81 on the New York Mercantile Exchange as slowing global
economic growth contributed to worries about oil demand
(http://www.marketwatch.com/story/oil-weaker-but-pares-decline-2019-10-15).
Gold futures declined on Tuesday
(http://www.marketwatch.com/story/gold-edges-lower-as-market-participants-weigh-trade-deal-earnings-season-2019-10-15)
to post their lowest settlement month to date, as investors awaited
clarity on U.S.-China trade talks and as earnings season starts on
a positive note.
In Asia overnight, stocks trade mixed with Japan's Nikkei rising
1.9%, the China CSI 300 falling 0.4% and Hong Kong's Hang Seng
Index falling 0.1%.
(END) Dow Jones Newswires
October 15, 2019 16:32 ET (20:32 GMT)
Copyright (c) 2019 Dow Jones & Company, Inc.