Wall Street bounces back on strong corporate earnings
(Reuters) – U.S. stocks rose on Wednesday, as strong earnings from IBM, United Technologies and Procter & Gamble led a rebound for Wall Street from its second biggest decline in 2019.
International Business Machines Corp (IBM.N) jumped 8.78 percent and led the gains on the Dow Jones Industrial Average .DJI after the technology services company projected 2019 profit above expectations.
Gains in shares of IBM also lifted the S&P technology sector .SPLRCT, which rose 1.19 percent.
A 6.65 percent rise in United Technologies Corp (UTX.N), which reported a better-than-expected quarterly profit, helped push the S&P industrials sector .SPLRCI 1.05 percent higher.
Fellow industrial companies Boeing Co (BA.N), Caterpillar Inc (CAT.N) and 3M Co (MMM.N) rose between 0.5 percent and 1.2 percent.
Wall Street’s gain follows a more than 1 percent loss on Tuesday on worries about global growth due to a gloomy economic outlook from the International Monetary Fund, signs of further cooling in China’s economy and mixed reports on U.S.-China trade talks.
“Given a day like yesterday, a bounce driven by earnings is not unusual,” said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.
“UTX, being an industrial company, is definitely something investors are looking at for hints on the impact of a global economic slowdown. The fact that it provided a strong forecast just shows the U.S. economy is actually solid.”
Easing some concerns about trade talks, White House economic adviser Kevin Hassett said he believed the United States and China could reach a trade deal by a March 1 deadline.
At 9:56 a.m. ET the Dow Jones Industrial Average .DJI was up 283.95 points, or 1.16 percent, at 24,688.43, the S&P 500 .SPX was up 18.80 points, or 0.71 percent, at 2,651.70 and the Nasdaq Composite .IXIC was up 58.66 points, or 0.84 percent, at 7,079.02.
Despite the pullback on Tuesday, the benchmark S&P 500 index .SPX is less than 10 percent away from its record closing high on Sept.20 and has climbed about 6 percent this year.
Procter & Gamble Co (PG.N) rose 5.98 percent, helping the consumer staples sector .SPLRCS rise 1.41 percent, after its quarterly revenue beat Wall Street expectation.
The biggest decliner in the sector was Kimberly-Clark Corp (KMB.N), which fell 1.96 percent after its quarterly profit missed analysts’ estimates due to rising raw materials costs and a strong U.S. dollar.
The communication services sector .SPLRCL rose 0.93 percent on a 6.35 percent gain in cable services provider Comcast Corp (CMCSA.O), which beat analysts’ estimates for revenue on lower-than-expected video subscriber losses.
Abbott Laboratories (ABT.N) dropped 1.36 percent after the healthcare company missed quarterly revenue estimate due to lower sales of generic drugs in emerging markets and gave a downbeat forecast for the current quarter.
Of the 61 S&P 500 companies that reported until Tuesday, 78.7 percent have beat Wall Street’s profit estimates and that is above the historical average of 64 percent, according to Refinitiv data.
However, earnings growth estimates have dropped to 14.1 percent from 20.1 percent at the start of October.
Advancing issues outnumbered decliners by a 2.83-to-1 ratio on the NYSE and by a 2.83-to-1 ratio on the Nasdaq.
The S&P index recorded three new 52-week highs and no new lows, while the Nasdaq recorded 11 new highs and 14 new lows.
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