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US: Stocks surge amid strong earnings reports
[NEW YORK] Wall Street stocks surged at the open Tuesday to beat the string of records set last week amid solid corporate earnings reports and optimism for profits in 2018 due to the US tax reform.
About 10 minutes into the first trading session of the holiday-shortened week, the Dow Jones Industrial Average had jumped 0.8 per cent to 26,018.07, for the first time above the 26,000 mark.
The broad-based S&P 500 gained 0.5 per cent to 2,801.31, while the tech-rich Nasdaq Composite Index increased 0.7 per cent to 7,315.13. US markets were closed Monday for the Martin Luther King, Jr holiday observance.
The gains were helped by earnings reports from major companies that, despite big hits in the final quarter of 2017 due to recently-enacted changes in the US tax code, seem upbeat for the year ahead.
Citigroup took a one-time charge of US$22 billion mostly due to the tax changes, but without that hit, earnings were four per cent higher than the same period of 2016. The financial group's shares were up 1.2 per cent to US$77.72.
Meanwhile, General Motors saw its shares jump nearly three percent to US$45.35 after reporting an optimistic outlook for 2018 - despite a US$7 billion charge in the fourth quarter due to the tax overhaul.
Insurer United Health Group rose 2.2 per cent to US$233.81 after reporting stronger-than-expected revenues and a strong 2018 outlook.
But industrial group General Electric saw its share price plummet four percent to US$18.06 after reporting a US$6.2 billion charge due to its legacy insurance business.
Some analysts warned that investors might be forgetting that with stronger growth comes higher inflation, which could cause the Federal Reserve to raise interest rates faster.
"US economic growth has accelerated and could get a further boost from tax cuts, but that means the potential for inflation increasing is growing," Schwab said in a market update.
Still, he added, "The global economy is coming off its best year in some time, and although 2018 won't likely be an exact repeat, the immediate future looks bright."