U.S. stocks rose about 1 per cent on Tuesday, helped by gains in technology companies and as strong earnings from Netflix and UnitedHealth boosted optimism over what is expected to be the strongest earnings season in seven years.
Netflix shares rose 10 per cent to hit an all-time high after the video-streaming pioneer smashed analysts’ quarterly subscriber estimates.
UnitedHealth jumped 3 per cent after the largest U.S. health insurer raised its earnings forecast and posted results that beat Wall Street estimates.
Analysts expect profits of S&P 500 companies to rise 18.6 per cent in the first quarter, the biggest increase in seven years, according to Thomson Reuters data.
“Being able to surprise on the upside in the phase of higher expectations would be a real sign of strength,” said Willie Delwiche, investment strategist at Robert W. Baird in Milwaukee.
Hopes about a strong reporting season have helped divert attention from geopolitical and trade worries, which have roiled the markets in recent months.
“We’ve seen enough pessimism build up in investors as people are trying to look for the worst ... things blowing up from a geopolitical perspective. Earnings so far have been good enough to help leave some of the pessimism that’s out there,” Delwiche said.
The Dow Jones Industrial Average was up 0.88 per cent at 24,789.21. The S&P 500 rose 1 per cent to 2,704.74 and the Nasdaq Composite gained 1.67 per cent to 7,275.82.
At their session highs, all three indexes were above their 50-day moving averages.
Data on Tuesday showed U.S. homebuilding increased more than expected in March amid a rebound in the construction of multi-family housing units. The PHLX housing index rose 1.12 percent.
Ten of 11 major S&P sectors were higher, led by the technology index’s 1.9-per-cent gain. The consumer discretionary index rose 1.64 per cent, boosted by Netflix and Amazon, which gained 3.2 per cent.
BofA Merrill Lynch’s April fund manager survey found the world’s biggest tech stocks were investors’ top pick for the third straight month despite mounting worries over regulation.
Facebook, Apple, Amazon, Netflix and Alphabet — collectively known as the FAANG group — rose between 1.4 per cent and 9.7 per cent.
Goldman Sachs reversed course to drop 1.7 per cent, mirroring other big U.S. banks, shares of which declined despite beating Wall Street’s profit expectations.
J&J fell 1.43 per cent after the healthcare conglomerate raised its sales forecast for the year but kept its outlook for full-year profit unchanged.
Canada’s main stock index rose on Tuesday, helped by upbeat manufacturing data and as energy shares rose alongside oil prices.
At 1:26 p.m. ET, the Toronto Stock Exchange’s S&P/TSX Composite Index was up rose 60.44 points, or 0.4 per cent, at 15,360.84. Seven of the index’s 10 main sectors were in positive territory.
Economic data was upbeat, with Statistics Canada data showing Canadian manufacturing sales rose more than expected in February after two months of declines.
Also helping sentiment was improved prospects of a revamped North American Free Trade Agreement. Mexico’s economy minister said, barring some “tiny details,” work was finished on chapters including telecoms, energy and technical barriers to trade.
The biggest boost to TSX index came from the energy sector, which climbed 0.4 per cent as oil prices ticked higher on rising concerns over the potential for supply disruptions.
Shares of Enbridge Inc rose 2 per cent and were one of the biggest boost to the energy and overall TSX indexes.
The technology sector gained 2.6 per cent, helped by Shopify’s near 7-per-cent increase.
Also helping was Open Text’s 4.2-per-cent rise after activist hedge fund Blue Harbour Group LP CEO said the business information management software company could be acquired.
Investors are also braced for the potential of a more upbeat economic assessment by the Bank of Canada meeting this week, at which it is expected to keep interest rate unchanged.
Another rate hike is not expected until July. But the central bank’s optimism could raise expectations for a May hike.