NEW YORK (AP) Wall Street strengthened on Tuesday after more companies reported stronger-than-expected spring earnings.
The S&P 500 rose 12.82, or 0.3%, to 4,567.46 and its highest close since early April 2022. The Dow Jones Industrial Average gained 26.83, or 0.1%, to 35,438.07, and the Nasdaq composite climbed 85.69, or 0.6%, to 14,144.56.
General Electric helped lead the market with a 6.3% rally after reporting higher-than-expected last-quarter earnings. It also raised its full-year revenue and profit forecast.
Another industrial giant, 3M, rose 5.3% after the Scotch-Brite and Post-It maker raised its full-year profit forecast thanks in part to cost-cutting efforts. Homebuilder PulteGroup climbed 6.2% after reporting higher-than-expected spring earnings.
On the losing side of Wall Street were airline stocks, led by Alaska Air Group. It fell 9.7% despite reporting higher-than-expected earnings and revenue for the last quarter. Analysts said investors may have been disappointed with its financial guidance for the current quarter.
Raytheon Technologies fell 10.2% after saying accelerated recalls and inspections were needed for some of its Pratt & Whitney aircraft engines to check for a rare condition in the metal powder. That prompted the company to lower its forecast for how much cash it will generate this year, although it also posted stronger spring earnings than analysts had expected.
This week is busy for earnings reporting, and about 30% of S&P 500 companies are on the schedule. The majority of them have exceeded analysts’ expectations so far this season, as is usually the case.
Two of Wall Street’s most influential stocks announced their results after the close of trading for the day, Microsoft and Alphabet. They are two of the seven stocks behind the majority of the S&P 500, which gained almost 16% in the first half of the year.
This Magnificent 7 will need to deliver strong results to justify its huge gains for the year so far, as its shares have soared on expectations they will continue to generate strong growth. Both Alphabet and Microsoft are up more than 38% for the year so far.
Meanwhile, UPS has oscillated between gains and losses after reaching a tentative agreement with 340,000 unionized workers to raise wages, which could avert a strike. UPS ended the day down 1.9%
This week, another highlight for Wall Street also kicked off on Tuesday: the Federal Reserve’s latest interest rate meeting.
The Fed is expected to announce another interest rate hike on Wednesday as it attempts to rein in high inflation. That would take the federal funds rate to a range of 5.25% to 5.50%, its highest level in two decades and up from virtually zero at the start of last year.
High rates dampen inflation by slowing the overall economy and hurting stock prices and other investments. The hope among traders is that Wednesday’s move will be the last increase in this cycle because inflation has cooled since last summer.
Those hopes, along with the growing belief that the economy can avoid a long-predicted recession, have helped stocks rally strongly this year. The labor market remained remarkably strong, allowing US households to continue spending and supporting the economy. A report on Tuesday showed that US consumer confidence rose more than economists expected.
But many on Wall Street warn that the Fed is unlikely to give any signal on Wednesday that it is done raising rates. Inflation is still high, though it has moderated somewhat, and the economy may have to cave into a long but shallow recession if the Fed is to bring inflation back to its 2% target, according to Steven Ricchiuto, chief U.S. economist at Mizuho Securities.
In the bond market, returns have been relatively stable for Treasury bills.
The 10-year Treasury yield stood at 3.88%. It helps set the rates for mortgages and other large loans.
The two-year Treasury yield, which moves more on market expectations for Fed action, slipped to 4.88% from 4.92%.
In foreign markets, stock indexes were mixed.
Shares jumped 4.1% in Hong Kong and 2.1% in Shanghai. Chinese leaders promised measures to boost sluggish economic growth by supporting property sales and other struggling sectors, but gave no details or mentioned possible stimulus spending.
The indices evolved more modestly in the rest of the world.
AP Business Writer Joe McDonald contributed.
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