Stocks closed at new highs Tuesday after a raft of corporate earnings that beat expectations and renewed optimism that the 10-year bull market has strength to grow.
The Standard & Poor’s 500-stock index and the Nasdaq composite breached new closing highs. The Dow Jones industrial average finished just short of an all-time high.
The S&P 500 closed at 2,933, beating its previous closing high of 2,930 from Sept. 20. The tech-heavy Nasdaq closed at 8,120, up 1.3%, eclipsing its previous record close of 8,109 on Aug. 29.
The Dow finished the day at 26,656, up 145, or 0.55%. It is still 172 points — or 0.64% — below its all-time-highest close: 26,828 on Oct. 3, 2018.
Tuesday’s gains marked a big comeback for stocks after a disappointing 2018. The Dow fell 5.6% last year. The S&P dropped 6.2%, and the Nasdaq fell 4% on worries of a global slowdown.
Low interest rates, negligible inflation, record employment and reverberations from last year’s corporate tax cut are powering the U.S. economy and its stocks.
“You had 50 or so earnings announcements today, and all of them were very good,” said Kenny Polcari of ButcherJoseph Asset Management. “Today’s market is more about the forward guidance showing an improving economy going forward. It continues to be the theme. Three months ago, they were talking about recession and poor guidance, and that has not been the case at all.”
Tuesday’s pop came across a broad range of industries amid the busiest earnings week of the year. Nearly a third of all S&P companies report financial results this week. Consumer discretionary was the only industry in the red.
As of the close Tuesday, 79 of 102 companies reporting first-quarter results had beaten expectations, according to Howard Silverblatt of S&P Dow Jones indexese. Sixteen missed estimates, and seven met projections.
The S&P has risen 24.69% from its Dec. 24, 2018, low, Silverblatt said.
The Dow was close behind the other two major indices, with 22 of 30 companies advancing. Four members — Coca Cola, United Technologies, Verizon and Procter & Gamble — reported earnings that came in better than expected. The surprise was the forecasts for sales strength in some of those issues.
“Earnings season is not over, and we can just as easily see some earnings disappointments in coming days,” said Kristina Hooper, chief global market strategist at Invesco. “Or we could see some negative developments in the ongoing trade situation. We will probably see a pullback in coming months. All in all, I expect the S&P 500 to end the year modestly above where it is today.”