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Wall Street rises as earnings whip up risk appetite

3 minute read

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 18, 2021. REUTERS/Brendan McDermid

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  • J&J raises 2021 profit forecast after Q3 earnings beat
  • Insurer Travelers rises after beating profit estimates
  • Walmart up on entering GS 'conviction list'
  • P&G falls after warning on higher supply chain costs
  • Indexes up: Dow 0.51%, S&P 0.64%, Nasdaq 0.64%

Oct 19 (Reuters) - U.S. stock indexes rose on Tuesday as upbeat results from Johnson & Johnson and Travelers fired up risk appetite, after big banks kicked off the third-quarter reporting period on a positive note last week.

The benchmark S&P 500 index (.SPX) is now just 0.7% away from a record high hit in early September, with investors hoping that a flow of better-than-expected earnings reports will push the market to new highs despite concerns about an eventual tightening of monetary policy.

Johnson & Johnson's (JNJ.N) shares rose 3.1% as it increased its 2021 adjusted profit forecast, while insurer Travelers Cos Inc (TRV.N) added 3.0% after beating estimates for third-quarter profit. read more

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Nine of the 11 major S&P 500 sector indexes were trading higher, with healthcare stocks (.SPXHC) taking the lead, while technology shares (.SPLRCT) offered the biggest boost.

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

"Investors will be paying very close attention to pricing power, how companies are dealing with labor shortages and inflationary cost pressures within their business," said Eric Marshall, portfolio manager at Hodges Funds.

Growth stocks, including Facebook Inc (FB.O), Apple Inc (AAPL.O), Alphabet Inc (GOOGL.O) and Microsoft Corp (MSFT.O), rose between 0.3% and 1.2%. Netflix Inc (NFLX.O) fell 0.6% ahead of its quarterly results later in the day.

Investors are also looking out for warnings from companies that are more exposed to supply chain constraints, price rises and labor shortages.

Procter & Gamble Co (PG.N) fell 1.6%, weighing on the S&P 500 consumer staples sector (.SPLRCS), as it warned that higher commodity and freight costs would take a bigger bite out of earnings.

"Every inflation warning from corporate America was somewhat expected, so markets won't get unnerved unless they start to see the Federal Reserve panic," said Edward Moya, senior market analyst at OANDA.

Tesla Inc (TSLA.O) rose 0.2% ahead of its quarterly results on Wednesday, with investors watching for indications of its performance in China. read more

Walmart Inc's (WMT.N) shares rose 1.6% after Goldman Sachs added the world's largest retailer to its "Americas Conviction List".

At 11:53 a.m. ET the Dow Jones Industrial Average (.DJI) was up 178.13 points, or 0.51%, at 35,436.74, the S&P 500 (.SPX) was up 28.62 points, or 0.64%, at 4,515.08, and the Nasdaq Composite (.IXIC) was up 96.37 points, or 0.64%, at 15,118.18.

Among others, Atea Pharmaceuticals Inc (AVIR.O) plunged 61.6% after its experimental COVID-19 antiviral pill, being developed with Roche (ROG.S), failed to help patients with mild and moderate COVID-19. read more

Drugmaker Merck & Co Inc (MRK.N), which has already applied for U.S. authorization for its COVID-19 pill, rose 2.3% after the news on Atea. Pfizer Inc (PFE.N), due to report data on its antiviral as soon as this quarter, gained 1.8%.

Advancing issues outnumbered decliners for a 1.58-to-1 ratio on the NYSE and a 1.69-to-1 ratio on the Nasdaq.

The S&P index recorded 35 new 52-week highs and one new low, while the Nasdaq recorded 57 new highs and 58 new lows.

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Reporting by Shreyashi Sanyal and Devik Jain in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta

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