THE S&P 500 touched its highest level since early May yesterday as corporate profits from bellwethers Intel and Honeywell defied fears of a collapse in earnings.
The Dow Jones industrial average gained 103.16 points, or 0.81 per cent, to 12,908.70. The Standard & Poor’s 500 Index rose 9.11 points, or 0.67 per cent, to 1,372.78. The Nasdaq Composite Index added 32.56 points, or 1.12 per cent, to 2,942.60.
Chipmaker Intel reduced its growth forecast due to macroeconomic concerns late on Tuesday, but gross margins were healthy and the stock rose 3.3 per cent. Intel boosted technology shares and helped the market to rise for a second day.
“The theme coming out in earnings is companies are coming in short in revenue but still beat on earnings. Analysts have moved their targets [lower] and companies still are lean and mean and are able to generate profit,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group.
Companies remain cautious about a slowing economy, feeding the market’s hopes for further stimulus from the Federal Reserve.
Honeywell’s profits topped consensus views in what it called a “tough macroeconomic environment,” and its 6.7 per cent advance made it a top gainer on the S&P industrial sector.
Financials underperformed the broad S&P 500, with the sector slipping 0.6 per cent. Bank of America lost 4.9 per cent after it posted a decline in revenue.
Vivus shares jumped 9.6 per cent after regulators approved the company's weight-loss drug.
Shares of Starbucks fell as much as 2.7 per cent yesterday after Cleveland Research said sales momentum for the coffee maker slowed in June.