Dow and Nasdaq hit record highs; industrials outperform

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U.S. equities rose on Tuesday as investors focused on a slew of corporate earnings reports.

The Dow Jones industrial average briefly rose more than 100 points, hitting a new record high, before holding about 73 points higher with Boeing contributing the most gains. The S&P 500 gained about 0.24 percent, with industrials rising more than half a percent to lead advancers. The Nasdaq composite reached a new all-time high and held about 0.36 percent higher.

General Motors, Archer Daniels Midland and Michael Kors were among the companies that reported before the bell. Disney, Gilead Sciences, Mondelez, Pioneer Natural Resources and Zillow are among many other companies due to report after the market close.

Calendar fourth-quarter earnings have mostly surprised analysts, with more than 65 percent of firms reporting better-than-expected earnings, according to data from The Earnings Scout.

“We’ve come into a period of time where we see fundamentals and earnings improve and you have to juxtapose that with everything that’s going on in Washington,” said Art Hogan, chief market strategist at Wunderlich Securities. “Let’s put this on a percentage basis: 50 percent of this move has been on the promise of tax cuts and deregulation, … but a lot of this stuff has to come to fruition.”

Stocks rallied sharply after President Donald Trump won the U.S. election, amid higher prospects of corporate tax cuts, deregulation and government spending. The major U.S. indexes have recently held around all-time highs as investors await for more details on the administration’s policies.

A trader works on the floor of the New York Stock Exchange.

Getty Images
A trader works on the floor of the New York Stock Exchange.

“I keep coming back to this, and that is we’ve moved 180 degrees to a business friendly environment in Washington,” said Bruce Bittles, chief investment strategist at Baird. “A lot of people miss the fact that this is such a huge reversal from even the past 16 years.”

In economic news, the U.S. trade deficit last year reached its highest level since 2012. For the whole year, the deficit rose 0.4 percent to $502.3 billion, the Commerce Department said.

Other data released include the job openings and labor turnover survey, which showed job openings in the U.S. totaled 5.501 million at the end of December.

U.S. Treasury yields traded mixed on Tuesday after Philadelphia Federal Reserve president Patrick Harker said a March rate hike should be on the table. The benchmark 10-year note yield held near 2.41 percent, while the short-term two-year note yield traded around 1.169 percent.

“Regardless of what Harker thinks we know that it really only matters what Yellen, Fischer and Dudley think,” said Peter Boockvar, chief market analsyt at The Lindsey Group.

“As its clear that the Fed only likes to raise rates on days where there is a press conference and they are scheduled for 4 this year at the same time they want to hike 3 times, they better get moving then. We still are calling for a March hike but the fed funds futures market barely blinked after Harker,” Boockvar said in a note.

Overseas, European equities traded mostly higher, with the pan-European Stoxx 600 index rising 0.54 percent. In Asia, stocks traded mostly lower, with the Shanghai composite falling 0.12 percent and the Nikkei 225 dropping 0.35 percent.

— The Associated Press contributed to this report.

On tap this week:

Tuesday

Earnings: Disney, Mondelez International, Buffalo Wild Wings, Plains All American, Pioneer Natural Resources, Panera Bread, Zillow

1:00 p.m. 3-year note auction

3:00 p.m. Consumer credit

Wednesday

Earnings: Time Warner, Glaxo SmithKline, Whole Foods, Prudential Financial, Carlyle Group, Alaska Air, Humana, Allergan, Rayonier, Suncor, Lions Gate, Owens Corning, Sanofi, Level 3 Communications, Jacobs Engineering

1:00 p.m. 10-year note auction

Thursday

Earnings: Coca-Cola, Kellogg, Twitter, Yum Brands, Beazer Homes, Cummins, Total, Agrium, Occidental Petroleum, Nissan, Borg Warner, Dunkin Brands, Expedia, News Corp, Nvidia, Pandora Media, Activision Blizzard, Thomson Reuters, KKR

8:30 a.m. Initial claims

9:10 a.m. St. Louis Fed President James Bullard

10:00 a.m. Wholesale trade

1:00 p.m. 30-year bond auction

1:10 p.m. Chicago Fed President Charles Evans

Friday

Earnings: Aon, Calpine, Buckeye Partners, ArcelorMittal, Ventas, Nippon Telegraph, Interpublic

8:30 a.m. Import prices

10:00 a.m. Consumer sentiment

2:00 p.m. Factory orders

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