On Wall Street, stock prices rose on Tuesday thanks to solid business results from companies, which supported investors’ hopes that earnings would increase for the first time after four consecutive quarters of decline. The Dow Jones strengthened by 0.42 percent to 18,161 points, while the S&P 500 rose by 0.62 percent to 2,139 points, and the Nasdaq index increased by 0.85 percent to 5,243 points. The rise in the indices is attributed to a series of better-than-expected quarterly business reports from companies, including Netflix, UnitedHealth, and Goldman Sachs.
After 52 companies from the S&P 500 index released their reports, analysts in a Reuters survey estimate that in the past quarter, corporate earnings increased by 0.2 percent compared to the same period last year, while at the beginning of the earnings reporting season, they expected a profit decline of 0.7 percent.
Investors hope that the financial reports from companies will show that earnings have increased for the first time after four quarters of decline, which would mark the end of the earnings recession that has been ongoing since the third quarter of 2015.
“We received decent results. As most companies exceed analysts’ estimates, investors believe that this will be the first quarter in the last five where earnings will increase year-over-year,” says Jack Ablin, director at BMO Private Bank.
If most other American companies also exceed analysts’ expectations, the third quarter of this year would also be the first since the end of 2014 where both earnings and revenues of companies have increased.
As a result, all 11 main sectors of the S&P 500 index ended in the positive yesterday, with stock prices in the healthcare sector rising the most, by 1.1 percent.
European stock markets also saw price increases yesterday. The London FTSE index strengthened by 0.76 percent to 7,000 points, while the Frankfurt DAX rose by 1.22 percent to 10,631 points, and the Paris CAC increased by 1.32 percent to 4,508 points.
