Dow, S&P 500 lifted by earnings, chips hold Nasdaq back
The S&P 500 and the Dow led the way on Tuesday as a string of solid earnings lured stock buyers to industrials and capital goods and away from tech shares.
Weakness in growth and microchip stocks held tech-laden Nasdaq nominally lower.
Third-quarter earnings season has shifted into overdrive, with corporate giants such as General Motors, GE Aerospace, 3M and Coca-Cola posting generally upbeat results. But with major U.S. stock indexes hovering near record highs and valuations stretched, upbeat results alone could prove insufficient to sustain investor risk appetite.
“I think what’s moving stocks today is exclusively the third quarter earnings, with many of the Dow components like 3M and General Motors being the driving force,” said Sam Stovall, chief investment strategist of CFRA Research in New York. “That’s really that’s what Wall Street is focusing on right now because until the government shutdown is concluded and we start getting a good flow of economic data, I think investors are just going to be focusing on the earnings.”
General Motors lifted its forecast and tempered its anticipated tariff hit. The automaker’s shares jumped 15.4%.
Coca-Cola shares gained 4.1% after solid consumer demand drove its better-than-expected results, while diversified manufacturer 3M advanced 6.2% after hiking its full-year forecast, bolstered by its focus on higher margin products and cost controls.
Aerospace and defense companies Lockheed Martin, Northrop Grumman and RTX all raised their forecasts, benefiting from solid demand for war machinery.
The S&P 1500 Aerospace/Defense index advanced 1.8%.
So far, 78 of the companies in the S&P 500 have reported. Of those, 87% have beaten Wall Street expectations. Analysts currently foresee aggregate third-quarter S&P 500 earnings growth of 9.2% year-on-year, more robust than their 8.8% estimate as it stood on October 1, according to LSEG data.
High-profile results from Tesla, IBM, Procter & Gamble and Intel are also on tap this week. Netflix was up 0.3% ahead of its results after the bell.
The Dow Jones Industrial Average rose 335.18 points, or 0.72%, to 47,043.68, the S&P 500 gained 10.91 points, or 0.16%, to 6,746.15 and the Nasdaq Composite lost 8.10 points, or 0.03%, to 22,982.45.
Among the 11 major sectors of the S&P 500, consumer discretionary and industrials led the gainers, while utilities were down most.
Warner Brothers Discovery announced it is considering an outright sale, citing interest from several potential buyers, in the latest media shakeup. The company’s stock surged 9.6%.
The government shutdown, now in its third week, has left investors, economists and policymakers in the dark in the absence of official data, complicating the efforts of the data-dependent Federal Reserve.
Even so, the central bank will implement two more 25-basis-point reductions to its key policy rate by year-end, according to a Reuters poll of economists, who remain divided regarding the Fed’s path forward in 2026.
U.S. President Donald Trump also struck a positive tone on trade, saying he expects to reach a “fair deal” with Chinese President Xi Jinping, while downplaying tensions over Taiwan
Markets will keep an eye on Trump’s upcoming meeting with Xi on the sidelines of next week’s economic summit in South Korea.
Advancing issues outnumbered decliners by a 1.41-to-1 ratio on the NYSE. There were 246 new highs and 36 new lows on the NYSE.
On the Nasdaq, 2,274 stocks rose and 2,315 fell as declining issues outnumbered advancers by a 1.02-to-1 ratio.
The S&P 500 posted 19 new 52-week highs and no new lows while the Nasdaq Composite recorded 45 new highs and 49 new lows.