Business Earnings Pull Stocks Higher 04/25 12:31
Profits are climbing for companies, and so are their stock prices.
NEW YORK (AP) -- Profits are climbing for companies, and so are their stock
More big businesses joined the earnings parade Tuesday, saying their profits
were even larger in the first three months of the year than analysts were
expecting, including Caterpillar and McDonald's. The gains put U.S. indexes on
track to add to their big gains from Monday.
KEEPING SCORE: The Standard & Poor's 500 index rose 14 points, or 0.6
percent, to 2,388 as of 12:10 p.m. Eastern time.
The Dow Jones industrial average climbed even more due to the big gains for
Caterpillar and McDonald's, which are both among the 30 stocks in the average.
The Dow rose 240 points, or 1.2 percent, to 21,004.
The Nasdaq composite rose 41, or 0.7 percent, to 6,025, its first move above
The Russell 2000 index of smaller stocks also reached record heights and was
up 15 points, or 1.1 percent, to 1,413.
PROFITS PILING HIGHER: After struggling for years with a slow global economy
and weak oil prices, big U.S. businesses are in the midst of reporting their
best quarter of profit growth in years, analysts say.
Companies in the S&P 500 are on track to report overall growth of about 10
percent in first-quarter earnings per share, according to S&P Global Market
Intelligence. This is a particularly busy week, and more than a third of the
companies in the S&P 500 are set to unveil their first-quarter results.
Many investors say the strong profit reports are necessary for them to feel
comfortable with how high stock prices have climbed. One traditional method
used to gauge whether a stock is too pricey is to compare its price to how much
profit the company makes. In recent years, stock prices have climbed faster
than earnings, which has fed some worries about an overly expensive market.
CATERPILLAR CRUSHES: The machinery maker soared $6.99, or 7.2 percent, to
$103.80 after reporting stronger revenue and profits for the first quarter than
analysts expected. It also raised its forecast for full-year results. The big
gain means its stock has recovered from losses incurred last month on worries
about an Internal Revenue Service challenge of its taxes. Caterpillar has
denied it broke any federal tax laws.
WELL DONE: McDonald's jumped $6.91, or 5.1 percent, to $141.14 after
likewise surprising investors with better-than-expected results. New items on
its menu helped it to drive sales at its U.S. restaurants.
HEALTHY: Biogen climbed $10.90, or 3.9 percent, to $287.76 after reporting
stronger revenue and earnings than analysts expected.
THE TAX PLAN: One of the main reasons for the stock market's strong ascent
since November is excitement about the prospect for lower taxes for businesses.
President Donald Trump is expected to unveil details of his tax plan on
Wednesday, including a cut in the corporate tax rate to 15 percent from 35
Investors, though, have grown more skeptical about the ability for
Republicans in Washington to push through big change following their stumbles
in overhauling the nation's health care system.
Washington could remain center stage for investors' attention this week. The
federal government is at risk of another shutdown unless Congress agrees on a
ECONOMIC REPORTS: More good news came for the housing industry, as sales of
new homes accelerated their pace in March. Economists had been expecting a
A measure of consumer confidence slipped in April, but it remains close to
its highest level in 16 years.
OUTLIER: Express Scripts Holding was among the few stocks to fall on
Tuesday, and it lost $8.40, or 12.5 percent, to $58.85. The company's biggest
customer, Anthem, doesn't plan to renew its contract after it expires in 2019.
Only two stocks fell for every five that rose on the New York Stock Exchange.
OVERSEAS MARKETS: Global indexes added to big gains they made on Monday,
when markets soared after results from the first round of France's presidential
election raised expectations that the European Union and the euro currency will
In Europe, France's CAC 40 rose 0.2 percent, Germany's DAX rose 0.1 percent
and the FTSE 100 in London rose 0.2 percent. In Asia, Japan's Nikkei 225 index
climbed 1.1 percent, South Korea's Kospi gained 1.1 percent and the Hang Seng
in Honk Kong jumped 1.3 percent.
COMMODITIES: The price of gold fell $12.20 to $1,265.30 per ounce, silver
dropped 26 cents to $17.60 per ounce and copper added 2 cents to $2.58 per
Benchmark U.S. crude oil fell 15 cents to $49.08 per barrel. Brent crude,
which is used to price international oils, fell 11 cents to $51.49 per barrel.
Natural gas fell 2 cents to $3.14 per 1,000 cubic feet.
CURRENCIES: The euro rose to $1.0945 from $1.0858 late Monday. The dollar
rose to 111.07 Japanese yen from 109.79, and the British pound rose to $1.2836
BOND YIELDS: Interest rates continued to climb from the low they set in the
middle of the month.
The yield on the 10-year Treasury rose to 2.31 percent from 2.27 percent
late Monday. It was at 2.17 percent a week ago.