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Wall Street ends higher as investors bet on positive earnings season

Stock MarketsOct 19, 2021 06:49PM ET
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© Reuters. Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 18, 2021. REUTERS/Brendan McDermid

By Shreyashi Sanyal and Sinéad Carew

(Reuters) - U.S. stock indexes closed higher on Tuesday with the biggest boosts from the technology and healthcare sectors as investors appeared to bet on solid quarterly reports even as some worried that it was too early to celebrate.

In its fifth straight session of gains, the benchmark S&P 500 index finished just 0.4% below its early September record close while the Dow Jones Industrials average ended the day about 0.5% below its record reached in mid-August.

Johnson & Johnson (NYSE:JNJ)'s shares added 2.3% providing a big boost to the S&P 500 after it raised its 2021 adjusted profit forecast. Insurer Travelers (NYSE:TRV) Cos Inc climbed 1.6% after beating its profit estimates.

High-profile technology and communications companies were also big S&P boosts with Apple Inc (NASDAQ:AAPL), Facebook (NASDAQ:FB) and Microsoft (NASDAQ:MSFT) all rising.

But in the second week of earnings with a "very small sample" of releases, Steve Sosnick, chief strategist at Interactive Brokers (NASDAQ:IBKR), worried about a possible pullback.

"We're seeing volatility measures like the VIX flipping from nervous to complacent in a really short period of time," said Sosnick. "We may be a bit ahead of ourselves. The mostly likely scenario is that we make one more run at new S&P highs and then we pull back, subject to earnings."

The CBOE market volatility index fell 0.6 points after earlier hitting 15.57, its lowest level since mid-August.

Analysts now expect S&P 500 earnings to rise 32.4% from a year earlier, according to Refinitiv data.

"The key for the market to going up from here will not be higher multiples, it will have to be higher earnings. That's why it's so important to pay attention to what those profit margins do going forward and what the trajectory of GDP looks like," said Eric Marshall, portfolio manager at Hodges Funds.

"Investors will be paying very close attention to pricing power, how companies are dealing with labor shortages and inflationary cost pressures within their business."

The Dow Jones Industrial Average rose 198.7 points, or 0.56%, to 35,457.31, the S&P 500 gained 33.17 points, or 0.74%, to 4,519.63 and the Nasdaq Composite added 107.28 points, or 0.71%, to 15,129.09.

Ten of the eleven major S&P 500 sectors closed higher, with healthcare stocks, up 1.3% after dropping 0.7% in Monday's session. The next biggest gainer was utilities, which rose 1.26% after falling almost 1% Monday.

Netflix Inc (NASDAQ:NFLX), after closing up 0.2%, added slightly to gains after the bell when quarterly results showed that global interest in Korean thriller "Squid Game" lured more new customers than expected.

Tesla (NASDAQ:TSLA) Inc, which closed down 0.7%, is due to release results on Wednesday, with investors watching for indications of its performance in China.

Procter & Gamble (NYSE:PG) Co, fell 1% during the session, after it warned that it would have to raise prices of some products to counter higher commodity and freight costs.

However, Walmart (NYSE:WMT) Inc shares added 2% after being added to Goldman Sachs (NYSE:GS) "Americas Conviction List."

Helping the healthcare sector on Tuesday was drugmaker Merck & Co Inc, which rose 3% while Pfizer Inc (NYSE:PFE) climbed 1.9% following the release of a competitor's COVID-19 drug study results.

Its competitor, Atea Pharmaceuticals Inc, fell 66% after the company's antiviral pill, being developed with Roche, failed to help patients with mild and moderate COVID-19.

Advancing issues outnumbered declining ones on the NYSE by a 1.51-to-1 ratio; on Nasdaq, a 1.69-to-1 ratio favored advancers.

The S&P 500 posted 44 new 52-week highs and 1 new lows; the Nasdaq Composite recorded 72 new highs and 69 new lows.

On U.S. exchanges 9.5 billion shares changed hands compared with the 10.29 billion moving average for the last 20 sessions.

Wall Street ends higher as investors bet on positive earnings season
 

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Comments (8)
elliot trach
elliot trach Oct 20, 2021 12:58AM ET
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you didn't adat to the Fed and low interest, debt, etc been going on for years?? Bitter people. Not adapt to circumstances. vs your desires. Agree with Michael Angelo
Suliman Albukari
Suliman Albukari Oct 19, 2021 5:27PM ET
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Is it usa30?
Rodney Dangerfield
Rodney Dangerfield Oct 19, 2021 4:19PM ET
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the wealthiest 10% of Americans own 89% of all the stocks lmfao
me ish
me ish Oct 19, 2021 10:49AM ET
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Remember this site is part of the mainstream media - their job is to encourage retail investors to buy the dip whilst the smart money is selling to the retailers - thus retail, as always gets to hold the bag as it plummets. Ever the way it was - never buy at the top!!! These prices are way too high based on the state of the real global economy.
Marco cuevas
Marco cuevas Oct 19, 2021 10:49AM ET
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Hence manipulation even by the media.
Michael Angelo
Michael Angelo Oct 19, 2021 10:37AM ET
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Are these comments part of some routine, template about how frustrated people are with a 33% yearly gain watching from the sidelines. Because are always the same tear.
Matt Kay
Matt Kay Oct 19, 2021 10:37AM ET
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33%? why not 100% 1000%. This is not normal. People are trying to warn clueless people about whats to come. I, for one, am not happy because everything that I knew about capital markets is being thrown out the window and destroyed by the fed and the 1%.
Antonio Velardo
Antonio Velardo Oct 19, 2021 10:37AM ET
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Same bad comments from same frustrated short sellers.
Larry DeAngelis
Larry DeAngelis Oct 19, 2021 8:31AM ET
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Goldman Sachs Conviction List. They are the biggest convicts!!!
me ish
me ish Oct 19, 2021 8:31AM ET
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vampire squid strikes again!
Mitchel Pioneer
Mitchel Pioneer Oct 19, 2021 8:20AM ET
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Looks like the US Ponzi Scheme, greatest financial FRAUD in history, and biggest investment JOKE in the world is heading to new records, as Wall Street takes aim at the US working class and financially defiles them in broad daylight.
Sam Gates
Sam Gates Oct 19, 2021 8:08AM ET
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Market going to drop nasty . Short
me ish
me ish Oct 19, 2021 8:08AM ET
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agreed - in the next 24 hours - max on the Dow would be around 35400
me ish
me ish Oct 19, 2021 8:08AM ET
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Dec futures, that is
 
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