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US: Dow ends above 23,000 for first time on strong IBM earnings
[NEW YORK] The Dow surged to a record Wednesday, easily topping 23,000 points following strong earnings from IBM that boosted confidence about the rest of the quarterly reporting season.
The Dow Jones Industrial Average jumped 0.7 per cent to 23,157.60, its third straight record.
The broad-based S&P 500 rose 2,561.26, while the tech-rich Nasdaq Composite Index edged up to 6,624.22. Both the S&P 500 and Nasdaq also finished at records.
IBM shot up 8.9 per cent after it reported a four percent drop in third-quarter earnings to US$2.7 billion, but offered a more bullish outlook on revenue growth after more than five years of declining sales. Key businesses such as cloud computing and artificial intelligence scored higher revenues.
Canaccord Genuity now estimates that third-quarter earnings growth will come in at 4.4 per cent, up from 3.5 per cent at the start of the period and more upward revisions likely.
Canaccord said it also sees a strong likelihood of additional earnings growth in 2018 due to an improving economy, a likely US tax cut and other factors.
"In our view, investors are not adjusting expectations up enough to reflect headwinds that have become tailwinds for growth," said Canaccord, which has predicted the S&P 500 would hit 2,800 in 2018.
Housing data released on Wednesday showed a drop in September in housing starts and permits for new construction, due partly to US hurricanes, but also declines in regions outside the hurricane-ravaged areas.
A report from the Federal Reserve characterized growth around the US as "split between modest and moderate" and said wages remain stubbornly low despite labour shortages.
Health insurer Anthem rose 2.4 per cent and CVS Health gained 2.0 per cent after the companies unveiled plans starting in 2020 for a new pharmacy benefits programme.
The venture replaces Anthem's programme with Express Scripts, which Anthem accused of overbilling it by billions of dollars. Express Scripts rose 1.0 per cent.
Dow member Chevron fell 1.8 per cent following a downgrade by Societe Generale.