US open: Stocks rise as Nasdaq hits fresh record on Alphabet earnings

US stocks rose in early trade on Tuesday as investors waded through a deluge of earnings, with solid numbers from Google parent Alphabet helping to push the tech-heavy Nasdaq to a new record high.

At 1550 BST, the Dow Jones Industrial Average was up 0.9% to 25,269.87, the S&P 500 was up 0.8% to 2,828.02 and the Nasdaq was 0.9% firmer at 7,910.32.

Tech shares got a boost as Alphabet rose 4.6% after it posted better-than-expected quarterly results late on Tuesday. Earnings per share for the second quarter came in at $11.75 versus expectations of $9.59, while earnings of $32.7bn were ahead of the $25bn analysts had pencilled in.

London Capital Group analyst Jasper Lawler said: "It wasn’t just the headline figures impressing traders, but also a surprise drop in costs reported by Alphabet. Costs had been increasing at a concerning rate over previous quarters as Alphabet played catch up in areas such as developing its cloud business and consumer business.

"These higher costs had been squeezing margins causing concern particularly among short term traders. Unexpectedly lower costs have eased these fears, boosting demand for the stock in the process."

Harley-Davidson surged as its second-quarter profit surpassed analysts' forecasts, while Eli Lilly was in the green on the back of solid second-quarter earnings and as it announced plans to file an initial public offering for its Elanco animal health unit.

Biogen pushed higher after the company lifted its 2018 profit and revenue guidance and issued better-than-expected second-quarter earnings, while United Technologies edged up as it raised its earnings outlook following a solid second quarter.

Elsewhere, Kimberly-Clark slipped after a second-quarter revenue miss and as the consumer products company issued a profit warning, while defence contractor Lockheed Martin nudged lower even as it upgraded its 2018 earnings forecast.

Whirlpool tumbled after the appliances maker's earnings late on Tuesday fell short of expectations and the company cut its profit outlook for the year.

Shares in Verizon and 3M were higher following the release of quarterly earnings, while Celgene was up after it reported positive results from a phase 3 cancer trial.

On the macroeconomic front, data released earlier showed activity in the US manufacturing sector picked up a little in July.

IHS Markit's flash purchasing managers' index ticked up to a two-month high of 55.5 from 55.4 the month before,

Meanwhile, the services PMI fell to 56.2 from 56.5 in June, while the composite index - which measures activity in both services and manufacturing - slipped to 55.9 from 56.2.

Chris Williamson, chief business economist at IHS Markit, said: "The July survey data indicate that the US economy sustained strong growth momentum after what looks to have been a solid second quarter, representing a good start to the second half of 2018. Although down from June, the July flash PMI is in line with the average for the second quarter and indicative of the economy growing at an annualised rate of approximately 3%.

"Buoyant domestic demand helped the service sector maintain particularly impressive growth and has helped cushion the goods producing sector from wilting demand in export markets, with goods export orders down for a second successive month in July."

Williamson added that trade frictions have become a major cause of concern, especially among manufacturers.

"Firms have become increasingly worried about the impact of tariff and trade wars on demand, prices and supply chains," he said.

Elsewhere, the Richmond Fed manufacturing index slipped one point to 20 in July, but remained in solid expansionary territory.