The Dow Jones Industrial Average soared to a new record on Tuesday, buoyed by a wave of corporate earnings reports that exceeded expectations. The index rose by 218 points, or 0.5 percent, surpassing its previous all-time high set earlier this month. Meanwhile, the S&P 500 remained steady, finishing just 0.3 percent below its record, and the Nasdaq composite slipped slightly by 0.2 percent.
In contrast, the Australian share market is poised for a downturn, with futures indicating a 45-point, or 0.5 percent, decline at the opening bell. On Tuesday, the ASX had gained 0.7 percent. As of 7:45 AM AEDT, the Australian dollar was trading at US64.89¢.
Corporate Earnings Drive Market Gains
The surge in the Dow was significantly influenced by 3M, which reported quarterly profits that surpassed analyst predictions, marking the largest price increase among the 30 companies in the index. Similarly, General Motors propelled the S&P 500 forward, rallying 14.9 percent after announcing stronger-than-expected quarterly results and revising its full-year financial forecasts upward. CEO Mary Barra highlighted the company’s strategic shift to curb losses in its electric vehicle segment, acknowledging that EV adoption rates are lagging behind initial projections.
Other notable performers included RTX, an aerospace and defense firm, which rose 7.7 percent, and Coca-Cola, which climbed 4.1 percent, both exceeding Wall Street’s profit expectations. Warner Bros. Discovery also saw an 11 percent jump after revealing it might reconsider its previously announced split of Discovery Global from Warner Bros., following interest from multiple parties in potential acquisitions.
Tech Stocks and Gold Experience Setbacks
Despite these gains, the market was tempered by declines in major tech stocks, which lost momentum after significant rallies. Alphabet, Google’s parent company, fell 2.4 percent from its peak, while Broadcom and Nvidia experienced declines of 1.9 percent and 0.8 percent, respectively.
Overall, the S&P 500 edged up by 0.22 points to 6,735.35, the Dow Jones Industrial Average increased by 218.16 points to 46,924.74, and the Nasdaq composite dropped by 36.88 points to 22,953.67.
Gold prices also took a hit, plummeting 5.7 percent from their recent record to $US4109.10 per ounce. Despite this drop, gold remains up nearly 56 percent for the year, reflecting its volatile nature amid fluctuating market conditions.
Economic Indicators and Federal Reserve Challenges
The pressure is mounting on companies to demonstrate profit growth following a robust 35 percent rally in the S&P 500 since April. These earnings reports are crucial, providing insights into the U.S. economy’s resilience, especially as the ongoing government shutdown delays vital economic data releases. This situation complicates the Federal Reserve’s task of balancing high inflation against a slowing job market.
Despite the shutdown, the Commerce Department is set to release a report on U.S. consumer spending this Friday, which could influence the Fed’s interest rate decisions. This will be the first government data release since the shutdown began on October 1.
Global Market Reactions
Internationally, stock markets in Europe and Asia mostly saw gains. Japan’s Nikkei 225 increased by 0.3 percent, nearing the 50,000 mark, as Sanae Takaichi, a conservative lawmaker, assumed the role of prime minister. Investors anticipate her administration will advocate for lower interest rates and other market-friendly policies.
In China, the Shanghai index rose by 1.4 percent, and Hong Kong’s index increased by 0.7 percent. These gains are fueled by expectations of a meeting between U.S. President Donald Trump and Chinese President Xi Jinping later this month, potentially easing trade tensions between the two economic giants.
In the bond market, the yield on the 10-year Treasury note eased to 3.95 percent from 4.00 percent late Monday.
As the global economic landscape continues to evolve, investors remain watchful of geopolitical developments and economic indicators that could shape future market dynamics.
