Strong Corporate Earnings Fuel Ongoing Wall Street Rally
Wall Street shrugged off the uncertainty generated by president Donald Trump's State Of The Union (SOTU) address, with all three major indices closing higher at the end of the trading day Tuesday.
U.S. stocks rose on Tuesday, buoyed by largely upbeat corporate results fueled by investor optimism ahead of SOTU on Tuesday evening. The cheery end to the day mitigated some of the lingering gloom gripping Wall Street from persistent economic and political uncertainties.
The Dow Jones Industrial Average rose 172.15 points, or 0.68 percent, to 25,411.52. The S&P 500 advanced 12.83 points, or 0.47 percent, to 2,737.7 while the NASDAQ Composite grew 54.55 points, or 0.74 percent, to 7,402.08, said Reuters.
The S&P 500 recorded 21 new 52-week highs and no new lows in this current bull run. The NASDAQ Composite posted 62 new highs and 14 new lows.
Volume on U.S. exchanges was 6.97 billion shares compared to the 7.56 billion average over the last 20 trading days.
"The market doesn't care if the wall gets built or if it's never built," said Tony Roth, chief investment officer of Wilmington Trust in Delaware. "All it cares about is that confidence and GDP aren't negatively impacted as a result of a government shutdown."
On the other hand, the CBOE Volatility index dropped 0.16 point to finish at 15.57, its lowest close in four months. This dreaded index is often referred to as an investor fear gauge.
In addition to strong corporate earnings, Wall Street's ongoing rally has been boosted by a surprising but welcome dovish stance from the Federal Reserve and expectations of a trade deal between the United States and China, however remote.
Nearly half of S&P 500 companies have reported earnings thus far. More than 70 percent of these firms have beaten analyst expectations, according to The Earnings Scout, a provider of corporate trend analysis.
Analysts noted U.S. stocks have had a great run so far this year, reversing the extreme and unnerving volatility that marked the last three months of 2018. Right now, the S&P 500 and the Dow are each up about 9 percent. The NASDAQ has risen more than 11 percent.
Tuesday's rally was led by fashion and cosmetics companies. Shares of Estée Lauder Companies, Inc, which rose 11.6 percent after the cosmetics maker's quarterly results topped estimates propelled by strong growth in China. Estée Lauder shares had the largest percentage gain among S&P 500 companies Tuesday.
Luxury fashion company Ralph Lauren Corporation also reported better-than-expected sales and earnings. Its shares jumped 8.4 percent higher on the good news.
Shares of Alphabet Inc reversed course to end 0.9 percent higher. The Google parent company's results beat estimates, but its shares were dragged down earlier in the session by sharply higher spending.