(Reuters) - U.S. stocks gained ground on Thursday, with support from a clutch of upbeat corporate results and ahead of earnings from marquee companies Google-parent Alphabet and Amazon.
With the third-quarter reporting season approaching its half-way mark, about three quarters of the S&P companies that have reported so far have topped profit expectation, potentially making it the strongest earnings period in five quarters.
However, with U.S. indexes at record levels, investors are taking a closer look at earnings to see if they justify lofty valuations.
Twitter (TWTR.N) jumped 17.27 percent after the company said it could turn its first ever profit in the fourth quarter, helped by cost cuts and new sources of revenue.
DowDuPont (DWDP.N) was up 3 percent after its third-quarter profit estimates came in well above Wall Street’s expectations ahead of the combined company’s first earnings report next week.
However, Celgene’s (CELG.O) 20 percent plunge was the biggest drag on the S&P 500 and the Nasdaq, after the company reported lower-than-expected sales for its psoriasis drug Otezla and lowered its overall 2020 sales outlook.
“You’re always going to see reactions to the misses, and that’s going to make the headlines. But stock prices tend to follow the bigger picture,” said Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Massachusetts.
“Perhaps companies have done a little bit more in guiding expectations than usual.”
Market is also keeping an eye out for any news around President Donald Trump’s nomination of the next Federal Reserve chair.
Trump’s search has narrowed down to Fed Governor Jerome Powell and Stanford University economist John Taylor, according to a Politico report. A White House official told Reuters that no final decision had been made.
In a step closer towards enacting Trump’s tax cut plan, the U.S. House of Representatives voted to clear a procedural path forward for the tax bill, which is expected to be unveiled next week.
At 12:32 p.m. ET, the Dow Jones Industrial Average .DJI was up 97.76 points, or 0.42 percent, at 23,427.22, the S&P 500 .SPX was up 7.66 points, or 0.30 percent, at 2,564.81 and the Nasdaq Composite .IXIC was up 5.07 points, or 0.08 percent, at 6,568.96.
Healthcare .SPXHC was the only laggard among the 11 major S&P sectors.
Tech sector’s .SPLRCT 0.51 percent rise gave the biggest boost to the S&P, while a 1 percent rise in JPMorgan (JPM.N) and Bank of America (BAC.N) led gains in the financial index .SPSY. Bristol-Myers Squibb (BMY.N) fell 3.8 percent after its quarterly profit fell short of estimates due to higher costs and an inventory write-off. AbbVie (ABBV.N) dropped 1.8 percent after reporting deaths in psoriasis studies.
Nike (NKE.N) jumped 3.7 percent, lifting the Dow the most, after the company said it expects earnings per share to grow in the mid-teens over the next five years.
Advancing issues outnumbered decliners on the NYSE by 1,664 to 1,136. On the Nasdaq, 1,591 issues rose and 1,214 fell.
Reporting by Sruthi Shankar in Bengaluru; Editing by Anil D'Silva
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