Dow rises as earnings season continues

The Dow Jones Industrial Average rose on Tuesday as the corporate earnings season rolled on, with investors eagerly awaiting President Donald Trump’s latest State of the Union.

The 30-stock Dow traded 64 points higher, led by DowDuPont and Intel. The Nasdaq Composite gained 0.2 percent while the S&P 500 hovered around the flatline. The indexes gave back some of their gains in early afternoon trading as tech shares came off their highs.

Alphabet, Seagate Technology and Estee Lauder are among the companies that have reported better-than-expected earnings. However, Alphabet dipped 0.7 percent as the company also revealed declining advertising prices and rising costs. Seagate shares gained 0.1 percent.

Estee Lauder, meanwhile, jumped 12 percent on better-than-expected results. The company also raised its 2019 earnings guidance. Archer-Daniels Midland fell 6.6 percent after reporting weaker-than-expected earnings and revenue.

Nearly half of S&P 500 companies have reported earnings so far, with about 70 percent of those companies topping analyst expectations, according to The Earnings Scout.

“However, the beat rates are running below last quarter as the overall year-over-year rates of sales and earnings growth has decelerated,” said Nick Raich, CEO of The Earnings Scout, in a note to clients. “Most importantly, 1Q 2019 through 3Q 2019 S&P 500 EPS growth expectations continue to go lower with some providers already showing negative growth.”

FactSet data show that corporate earnings for the first quarter are expected to decline by 0.8 percent. Raich said, however, he expects earnings to continue growing in the first half of 2019. He added the negative estimates are mostly a byproduct of “low-balled estimates.”

Disney, Electronic Arts, Snap and Spirit Airlines are among the companies scheduled to report after the bell Tuesday.

Wall Street also looked ahead to the State of the Union, which comes more than a week after the longest government shutdown in U.S. history came to an end. Investors should be looking for clues on a number of matters, including U.S.-China trade talks.

“We expect an optimistic tone on President Trump’s desire to strike a deal, but we remain cautious that these headlines are likely to whip around during any verification or enforcement phase,” Ed Mills, public policy analyst at Raymond James, wrote in a note to clients.

CNBC

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya