US open: Stocks rise as blue-chip earnings top forecasts
Positive reactions to a bunch of big-name stocks were providing a lift on Wall Street on Tuesday, with Spotify, General Electric, Coca-Cola, Spotify, 3M and General Motors all beating expectations.
Investors were also digesting a small pick-up in private-sector activity, as shown in the S&P Global purchasing managers' indices (PMIs) released shortly after the opening bell.
The Dow Jones Industrial Average and S&P 500 were both up 0.6% while the Nasdaq rose 0.8%.
Meanwhile, Alphabet and Microsoft will be in focus ahead of their results due out after the closing bell, with optimism rising high that the two giant tech stocks will continue their recent run, having risen 52% and 36% so far this year, respectively.
David Morrison, senior market analyst at Trade Nation, highlighted that the so-called Magnificent Seven – of which Alphabet and Microsoft are a part – have driven much of the stock-market gains so far this year.
"The importance of these companies to the health of the major US stock indices can’t be overstated. Just five companies, Alphabet, Microsoft, NVIDIA, Apple and Amazon account for around 25% of the market capitalisation of the S&P 500."
In economic news, the US manufacturing PMI unexpectedly improved in October to the 50-point level, which separates growth from contraction, up from 49.8 in September and ahead of the 49.5 forecast. The US services PMI also rose to 50.9 from 50.1, ahead of the 49.9 estimate.
After surpassing the 5% mark for the first time in 16 years on Monday before pulling back, the yield on a 10-year US Treasury was up just 1.9 basis points at 4.868%
Blue chips top forecasts
General Electric raised its full-year profit forecast for the third time this year on the back of strong quarterly earnings. The engineering giant said the boost in earnings was mainly due to robust demand for jet engine parts and services and improved performance in its renewable energy operations.
Spotify delivered a return to profitability in the third quarter after user and subscriber numbers beat expectations and revenues grew ahead of guidance. Monthly active users grew 26% to 574m, while subscribers increased 16% to 226m, with both figures coming in 2m ahead of guidance.
Soft drink behemoth Coca-Cola topped expectations on quarterly earnings and revenue in its latest report, with earnings per share coming in at 74 cents. That was well ahead of the 69 cents pencilled in by analysts surveyed by LSEG, while revenue reached $11.91bn, comfortably beating the expected $11.44bn.
American conglomerate 3M raised its earnings and cash flow guidance following a solid third quarter. 3M said the upgrade was a result if its "year-to-date performance and the continued strong operational execution".
General Motors delivered better-than-expected third-quarter earnings but the auto giant said it was pulling its annual guidance due to the impact of strikes. GM said it was withdrawing its guidance for the year due to volatility caused by strikes. It had previously guided to between $12bn and $14bn in adjusted earnings and net income attributable to shareholders of $9.3bn to $10.7bn.