US close: Stocks end up on earnings, Nasdaq breaches 6,000 for first time
US stocks ended in the black on Tuesday thanks to some well-received corporate news and as investors awaited a big tax reform announcement from President Donald Trump, with the tech-heavy Nasdaq breaching the 6,000 level for the first time.
The Dow Jones Industrial Average closed up 1.1% to 20,996.12, the S&P 500 rose 0.6% to 2,388.62, and the Nasdaq gained 0.7% to close at a record 6,025.49.
Investors were looking ahead to a possible announcement by Trump on Wednesday, after he tweeted over the weekend that his tax reform plans - which could include a reduction in corporate tax to 15% - would be revealed mid-week.
Neil Wilson, senior market analyst at ETX Capital, pointed out that tech stocks such as Amazon, Apple, Facebook, Google, and Microsoft, would be big beneficiaries of the proposed tax reforms.
“With the Nasdaq hitting all-time highs thoughts instantly return to the dotcom bubble. But we are a long way off the kind of multiples seen back then. That should offer some comfort,” he said.
“Meanwhile the Shiller PE Ratio for the S&P 500 is still well short of the level it hit at that time. Approaching 30, it’s very high historically but has a lot further to run to breach the 44 level it scaled before it all fell apart at the start of the noughties. For now it’s time to party like it’s 1999.”
Corporate news provided some cheer, with McDonald’s rallying after the fast food giant’s first-quarter earnings beat forecasts, while Caterpillar advanced after the construction equipment manufacturer raised its full-year revenue guidance and reported better-than-expected results.
DuPont was on the front foot after its quarterly earnings beat expectations, while Straight Path Communications surged after announcing that AT&T has five days to match a higher buyout bid it received.
AdvancePierre Foods Holdings climbed after Tyson Foods said that it will buy the company for $4.2bn.
Biogen gained after it reported a 7% rise in earnings, and Rite Aid pushed higher after topping earnings expectations.
On the downside, Coca-Cola edged lower after it posted a drop in first quarter earnings and revenue.
Lockheed Martin slipped as the US contractor trimmed its outlook after it missed revenue forecasts, while Eli Lilly & Co was also weaker after the drug maker swung to a first-quarter loss.
On the data front, the Conference Board's consumer confidence index fell to 120.3 in April from 124.9 the month earlier and slightly below the consensus forecast of 122.5.
The headline index was depressed by a 5.7 point drop in the expectations index and a 3.3 point dip in the current conditions number. Inflation expectations were unchanged at 4.7% over the next year.
Separately, new US home sales rose to 621,000 in March from 587,000 in February, coming in above the 584,000 consensus forecast.