19-7-2023 (NEW YORK) U.S. stocks extended gains on Tuesday as investors cheered better-than-expected corporate earnings. The Dow Jones Industrial Average rose by 366.58 points or 1.06% to 34,951.93, the S&P 500 added 32.19 points or 0.71% to 4,554.98, and the Nasdaq Composite Index increased 108.69 points or 0.76% to 14,353.64.
The second-quarter earnings season rolled in, with more large banks reporting encouraging results. Morgan Stanley, Bank of America, and Bank of New York Mellon all reported better-than-expected earnings, with a revival in investment banking and higher interest rates boosting profits in the second quarter. The three stocks surged 6.45%, 4.42%, and 4.11%, respectively.
Shares of Microsoft also rose after the tech giant set higher prices on its artificial intelligence (AI)-related software, jumping 4% on Tuesday and helping the Dow hit a 15-month high.
Most primary S&P 500 sectors ended in green, with technology and financials leading the gainers by rising 1.26% and 1.12%, respectively. Meanwhile, real estate and utilities led the laggards by losing 0.82% and 0.78%, respectively.
The U.S. second-quarter earnings season came this week against the backdrop of a more resilient economy than many expected. According to an analysis by UBS Global Wealth Management, the job market has remained healthy, supporting consumer spending, which has also benefited from excess cash on household balance sheets and slowly rising real incomes as inflation cools. As a result, U.S. economic data has consistently beaten expectations over the last several months, and the second-quarter earnings season is likely to reflect this trend, UBS said.
Investors were also digesting the latest economic data released on Tuesday. The U.S. Census Bureau reported that retail sales rose 0.2% month-over-month in June, lower than market expectations of 0.5%, suggesting that consumers are more thoughtful with their purchases. Data for May was revised up to 0.5% from 0.3%.
