James Hyerczyk
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Stock Chart Up

U.S. equity markets are up across the board on Tuesday with the NASDAQ Composite leading the way.  The tech-based index is being driven higher by strong revenue and earnings results from Google-parent Alphabet after Monday’s close. Upbeat earnings expectations helped the index reach an all-time high shortly after the opening.

The blue chip Dow Jones Industrial Average jumped more than 200 points shortly after the opening, led by solid gains in Boeing and United Technology. Although the Dow is lagging behind the NASDAQ in terms of performance, it is beginning to claw back most of the losses fueled by its exposure to U.S. tariffs against China.

The benchmark S&P 500 Index is also enjoying favorable gains, getting support from several sectors including materials, information technology and energy stocks.

Once again, strong earnings were behind the markets’ solid performance on Wall Street. Investors remained focused on traditional fundamentals at this time and are shrugging off concerns over trade disputes and tensions between the U.S. and Iran.

Earlier today, drug-maker Eli Lilly reported better-than-expected earnings. This was followed by strong reports from Biogen and United Technologies. According to FactSet, of the 21.4 percent of S&P 500 companies that have reported, 80.6 percent have topped analyst expectations for second-quarter earnings. Meanwhile, 74.1 percent of those companies have surpassed revenue estimates.

Investors are also working within the framework of a rising interest rate environment which traditionally had been used as an excuse to book profits or limit gains. This is largely because of the Fed’s strategy to raise interest rates gradually.

Global equity markets are also being supported by good news from China, for a change. Equities received a boost early Tuesday after China said it would use fiscal action to support its economy. The news shocked traders globally with the European Stoxx 600 index rising nearly 1 percent. At the same time, China’s Shanghai Composite surged 1.5 percent.

U.S. Treasury Markets

After Monday’s more-than-knee-jerk reaction to a spike in interest rates in Japan, conditions have settled in the U.S. Treasury markets. U.S. government debt prices inched higher on Tuesday with the benchmark 10-year Treasury note dipping to 2.954, while the yield on the 30-year Treasury bond dropped to 3.087.


U.S. Economic News

The Home Price Index (HPI) came in lower than expected at 0.2%. Traders were looking for 0.4%. However, the previous report was revised upward to 0.2%.

Flash Manufacturing PMI came in strong with a 55.5 reading, beating the 55.1 forecast. The previous report was also revised higher to 55.4.

Flash Services PMI was 56.2, slightly below the estimate and previous read.

Richmond Manufacturing Index was also stronger-than-expected at 20, matching the previous report.

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