U.S. Stock Indexes Hit New Record Highs Boosted by Strong Earnings

The three major stock indexes closed higher across the board on Wednesday, led by key quarterly earnings. The benchmark S&P 500 Index posted an intraday record before settling at 2,473.83, up 13.22 or +0.54%. The blue chip Dow Jones Industrial Average settled at a record 21640.75, up 66.02 or +0.31%. The tech-based NASDAQ Composite also hit a new intraday all-time high at 6382.64, finishing up 38.33 or +0.60%.

Earnings were clearly the driver in the markets on Wednesday. According to The Earnings Scout, of the 53 S&P 500 components that had reported as of Tuesday morning, 77 percent exceeded earnings expectations while 75 percent topped on revenue.

Individually, Morgan Stanley reported better-than-expected second-quarter results across the board, with trading revenue coming in above expectations. Dow-component IBM reported mixed quarterly results, with earnings per share topping expectations and sales disappointing. However, the tech giant also reported that its revenue declined for the 21^st straight quarter.

The rally may have also been a sign that investors have shrugged off the lingering uncertainty around the Trump administration’s ability to push through its fiscal agenda. Investors also said that good earnings from health care companies may offset the negative health care headlines.

U.S. Political News

It looks as if the Trump administration is ready to scrap its plans to repeal and replace Obamacare before moving to other items on its agenda like tax reform. Earlier in the week, Senate Republicans decided to delay indefinitely it plans to repeal and replace Obamacare. On Tuesday, they decided to end plans to repeal Obamacare without a replacement when three GOP senators said they would vote against it.

Meanwhile, House Speaker Paul Ryan said the House would start drafting legislation to overhaul the nation’s tax code after the summer recess.

Economic News

U.S. Building Permits grew by 1.25 million units in June, beating the 1.20 million unit estimate and coming in higher than the previous 1.17 million units. Housing Starts also came in higher-than-expected at 1.22 million units.

Housing starts hit their highest level since February with its 8.3 percent jump last month. Additionally, mortgage applications, meanwhile, rose 6.3 percent.

Crude Oil

Crude oil futures rose to a six-week high on Wednesday after posting a 1.6% gain. The catalyst for the rally was a drop in U.S. commercial crude inventories. According to the U.S. Energy Information Administration, inventories fell by 4.7 million barrels in the week-ending July 14. Analysts were looking for a 3.2 million barrel draw down. Gasoline stocks also fell more than expected, dropping by 4.4 million barrels.