Wall Street bulls push stocks higher amid blockbuster corporate earnings
|- Goldman Sachs, Netflix, and IBM beat expectations in the first quarter of 2018.
- The market is focusing on corporate earnings and is putting aside worries over China, Russia, and Syria.
- The three main US indices shot higher in Tuesday’s trading, along with the US dollar.
US stocks made some solid gains on Tuesday. The S&P 500 index rose 1.1% or 28.54 points to 2,706.38. The Dow Jones Industrial Average climbed 0.9% or 213.59 points to 24,786.63, closing in the green for the year while the Nasdaq Composite Index soared 1.7% or 124.81 points to 7,281.10. The US Dollar Index (DXY) rose to 89.67 intraday and is now consolidating in the 89.50 region.
The market clearly decided to shift its focus to corporate earnings and downplay the risks associated with China, Russia and Syria geopolitical tensions. At the beginning of the week, the market was unsure of how the US-Russia relations would develop after the airstrike on Syria. It turns out that for now, the White House is refraining to make any move on Russia.
“The risk trade, especially the “Russia-risk” trade, has received a bona fide adrenalin boost — US president Trump surprised by scrapping the push for new sanctions. The move, together with the tenor of the US-led strike in Syria, signals a tempered de-escalation may be playing out.” according to Mark Bradford at BCS Global Markets.
Goldman Sachs’ first-quarter results beat analysts expectations. With “revenues of $10.04 billion versus expectations of $8.74 billion.” and “earnings per share of $6.95 versus expectations of $5.58” according to Thomson Reuters. Additionally, the revenue from equities trading jumped 38 % to $2.31 billion versus the $1.92 billion forecast by FactSet.
Netflix jumped a whopping 9% after reporting earnings. Its revenue rose to $3.7 billion versus $3.69 billion expected, according to Thomson Reuters. “We're investing in more marketing of new original titles to create more density of viewing and conversation around each title," said Netflix in a statement.
IBM reported above expectation earnings: “$2.45 per share, excluding certain items, vs. $2.42 per share expected by analysts” according to Thomson Reuters. While its revenue was: “$19.1 billion, vs. $18.84 billion as expected by analysts” according to Thomson Reuters.
S&P 500 daily chart
The index broke above the 50-period simple moving average and is testing the 100-period simple moving average. Support lies at 2,650 swing low (early March) and at 2,551.75 cyclical low. Resistances are seen at 2,713.44 (100-period SMA) and at 2,800 swing high. The momentum is bullish.
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