US Stocks Rebound on Tech, House Goods 07/17 16:07
U.S. stocks rallied Tuesday as retailers, technology and household goods
companies all made solid gains and helped the market shake off a weak start.
NEW YORK (AP) -- U.S. stocks rallied Tuesday as retailers, technology and
household goods companies all made solid gains and helped the market shake off
a weak start. Netflix slumped after investors were disappointed with the
streaming video company's subscriber growth.
Stocks skidded at the start of trading as investors sold some of their
recent favorites including Facebook and Apple. But those stocks later recovered
and Netflix narrowed its losses. Technology companies also turned higher and
strong results from Johnson & Johnson pulled health care stocks upward.
Federal Reserve Chairman Jerome Powell delivered a positive view of the
economy as he told Congress that he expects the Fed to keep gradually raising
interest rates. Powell said the Fed believes the economy will stay strong and
inflation will remain at around 2 percent for the next few years. Stocks have
fallen previous times that Powell gave major addresses, but they didn't do so
Investors focused on company earnings, which aside from Netflix were mostly
good. Financial services company Charles Schwab and regional bank Comerica both
"Double-digit earnings growth for this quarter and this full calendar year
remains on track, and a 10 percent gain in earnings next year is also still
doable," said Sam Stovall, chief investment strategist for CFRA.
While investors have been buying U.S. stocks and selling foreign indexes
this year, Stovall said earnings growth for companies in overseas markets will
probably improve in 2019 while U.S. profit growth slows down. That could make
non-U.S. markets more appealing.
The S&P 500 index rose 11.12 points, or 0.4 percent, to 2,809.55 after it
dropped 9 points at the start of trading. The Dow Jones Industrial Average
gained 55.53 points, or 0.2 percent, to 25,119.89. The Nasdaq composite jumped
49.40 points, or 0.6 percent, to 7,855.12 and surpassed the record high it set
last week. The Russell 2000 index of smaller-company stocks rose 8.72 points,
or 0.5 percent, to 1,687.26.
Companies that sell clothing, food and household goods made solid gains.
Ralph Lauren advanced 2.6 percent to $133.30 and PepsiCo climbed 1.7 percent to
$114.88. Amazon as it said sales in the first hours of its annual Prime Day
promotion improved compared to last year in spite of website problems. The
company said it's resolving those issues. The stock rose 1.2 percent to
Netflix's weak subscriber totals sent the stock down 5.2 percent to $379.48.
The company has regularly beaten its own subscriber forecasts but failed to do
so in the second quarter and its third-quarter estimate was lower than analysts
expected. Things looked far worse for Netflix in early trading as the stock
plunged 14.1 percent before recovering most of that drop. Even with Tuesday's
loss, the stock is up 98 percent this year.
Johnson & Johnson's second-quarter profit grew thanks to better results from
its prescription drug business, and it posted higher sales than analysts
expected. The stock gained 3.5 percent to $129.11.
Financial services company Charles Schwab climbed 3.6 percent to $52.88
after it surpassed Wall Street forecasts in the latest quarter.
UnitedHealth, the largest U.S. health insurance company, once again beat
expectations in the latest quarter and raised its annual profit forecast. But
the company's spending on medical costs was higher than analysts expected, and
the stock lost 2.6 percent to $250.29. Investors worried that other health
insurers would have similar problems, and competitors Anthem and Humana also
Advertising companies sank after Omnicom said its business in North America
decreased in the second quarter and its U.K. business also shrank. The
advertising conglomerate lost 9.5 percent to $70.69 and Interpublic Group shed
6.1 percent to $22.26.
The European Union and Japan signed a broad trade deal Tuesday that will
eliminate nearly all tariffs across a third of the global economy. Japanese
consumers will pay lower prices for European wine and pork, while Japanese
machinery parts, tea and fish will get cheaper for Europe. The deal has been in
the works for years and contrasts with the more protectionist approach of U.S.
President Donald Trump.
Bond prices were little changed. The yield on the 10-year Treasury note
remained at 2.86 percent.
Benchmark U.S. crude erased an early loss and finished little changed at
$68.08 a barrel in New York. Brent crude, used to price international oils,
picked up 0.4 percent to $72.16 a barrel in London.
Wholesale gasoline gained 1.2 percent to $2.03 a gallon. Heating oil added
0.8 percent to $2.07 a gallon. Natural gas fell 0.7 percent to $2.74 per 1,000
Metals prices continued to fall. Gold dripped 1 percent to $1,227.30 an
ounce. Silver sank 1.2 percent to $15.62 an ounce. Copper fell 0.6 percent to
$2.75 a pound. All three are near their lowest prices in a year.
The dollar rose to 112.83 yen from 112.30 yen. The euro fell to $1.1664 from
Germany's DAX jumped 0.8 percent and the CAC 40 in France added 0.2 percent.
The British FTSE 100 index rose 0.3 percent.
Japan's benchmark Nikkei 225 gained 0.4 percent after reopening from a
public holiday. South Korea's Kospi lost 0.2 percent and Hong Kong's Hang Seng
shed 1.3 percent.