Market Snapshot: U.S. stocks rally after earnings and Powell testimony; Nasdaq hits record

Market Snapshot: U.S. stocks rally after earnings and Powell testimony; Nasdaq hits record

U.S. stock rose on Tuesday, extending a recent upswing after Federal Reserve Chairman Jerome Powell indicated the U.S. central bank wouldn’t move too quickly in changing monetary policy, and that it would be flexible in the face of changing conditions.

Traders also digested the latest round of corporate earnings, which came in mixed but nevertheless showed strong growth.

What are markets doing?

The Dow Jones Industrial Average DJIA, +0.21%  added 46 points, or 0.2%, to 25,110. The blue-chip average is on track for its fourth straight advance, as well as its eighth rise of the past nine sessions.

The S&P 500 SPX, +0.44% was up by 11 points, or 0.4%, to 2,809. The Nasdaq Composite Index COMP, +0.66%  advanced by 46 points, or 0.6%, to 7,852, hitting its latest in a series of intraday records.

The day’s gains were broad, with 10 of the 11 primary S&P 500 sectors higher on the day. Leading the move higher was the materials sector, which rose 1.4%, and technology stocks, up 0.8%.

What is driving the market?

Appearing in front of the Senate Banking Committee, Powell said the “best way forward is to keep gradually raising the federal-funds rate for now.” This was seen as suggesting that the central bank wouldn’t become too aggressive in raising rates, something that is widely seen as a risk to markets.

See: Fed Chairman Powell testifies before Congress—live video and blog

The main driver for individual stocks, however, is quarterly results, with a batch of Dow components and other major companies setting the early tone for the market.

Goldman Sachs Group Inc. GS, -0.92% reported second-quarter earnings that rose above expectations, but revenue fell below analysts’ consensus estimates. In a separate internal memo, the investment bank also announced that CEO Lloyd Blankfein would step down Oct. 1 and be replaced by President David Solomon. Shares were down 1%.

Johnson & Johnson JNJ, +3.59% reported second-quarter earnings and revenue that were better than expected, supported by strong sales of its cancer drugs and other medicines. Shares spiked 3.5% in their biggest one-day percentage advance since January 2016.

UnitedHealth Group Inc. UNH, -2.78% reported second-quarter earnings that beat expectations but premiums that missed. The company also raised its full-year earnings outlook, but shares fell 2.6%.

Netflix Inc. shares NFLX, -5.56%  tumbled 6% after the streaming-media company late Monday reported revenue and subscriber numbers that came in below forecasts. While the stock was among the biggest S&P 500 decliners of the day, it was well off its lows of the session, having previously dropped as much as 14%. Shares remain up 96% thus far this year.

Read more: Is Netflix falling down a mountain, or just tripping over a molehill?

What are strategists saying?

“We’ve had a lull in trade talk, which has allowed investors to focus on earnings. In order for earnings to really provide a boost to stocks, we’d have to exceed expectations, and the potential for that is there,” said David Joy, chief market strategist at Ameriprise Financial. “Recent momentum has been positive.”

Read: Fund managers say trade spat is the biggest risk stocks have faced in years

What’s on the economic calendar?

Industrial production rose 0.6% in June to more than offset a similarly sized decline in May, the Federal Reserve said Tuesday. That was a tick above the MarketWatch forecast.

The National Association of Home Builders’ monthly confidence index was unchanged at 68 in July.

See: MarketWatch’s Economic Calendar

Which stocks are in focus?

Technology stocks supported the overall market’s advance. Among notable names, Microsoft Corp. MSFT, +1.33%  was up 1.1% while Alphabet Inc. GOOGL, +1.55%  gained 1.4%. Inc. AMZN, +1.41%  , a consumer discretionary stock that often trades on tech issues, rose 1.3%.

CSX Corp. CSX, +0.22%  and United Continental Holdings Inc. UAL, +0.72%  are among companies on the earnings docket after the market’s close.

Papa John’s International Inc. stock PZZA, +0.21%  was down 1% after the pizza maker’s founder said it was a “mistake” to step down as chairman last week.

What are other markets doing?

Asian stocks closed mostly lower, but Japan’s Nikkei 225 index NIK, +0.44%  bucked the negative trend.

Trading in Europe was mixed, leaving the benchmark Stoxx Europe 600 index SXXP, +0.24% struggling for direction.

Oil prices CLQ8, +0.10%  traded higher, after steep declines on Monday when chatter about possible releases from global reserves sent Brent crude LCOU8, +0.47%  and West Texas Intermediate oil down more than 4%.

Gold futures GCQ8, -0.95%  settled 1% lower at $1,227.30 an ounce on Tuesday.

The ICE U.S. Dollar Index DXY, +0.50% a measure of the dollar against a half-dozen currencies, meanwhile, rose 0.3% to 94.784.

—additional reporting by Sara Sjolin

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