Better-than-expected earnings from a number of key Dow Jones Industrial Average components swept markets higher on Tuesday, Oct. 24, putting major indexes back on track for records.
The Dow was up 0.82%, hitting an intraday record. The blue-chip index increased around 200 points, its best one-day points gain since Sept. 11. Gains put the Dow back on track to secure a new closing record after snapping a five-day streak of all-time closing highs on Monday, Oct. 23.
The S&P 500 added 0.2% and the Nasdaq rose 0.25%. Both were just short of their own closing records.
A burst of earnings reports kept investors busy on Tuesday, the most prominent including Caterpillar Inc. (CAT) - Get Report , McDonald's Corp. (MCD) - Get Report and General Motors Co. (GM) - Get Report .
Dow component Caterpillar rose nearly 5% after exceeding profit and sales estimates over its third quarter. The heavy machinery company earned $1.77 a share, far better than 48 cents a year earlier. Adjusted profit of $1.05 a share beat estimates of $1.27. Overall revenue of $11.4 billion came in higher than $10.7 billion consensus.
McDonald's, also a Dow component, matched quarterly profit estimates and showcased robust comparable-store sales. The stock rose 1%.
The world's largest burger chain reported adjusted earnings of $1.76 a share, in-line with estimates, while revenue fell just over 10% to $5.755 billion and came in slightly higher than consensus. Global comparable-store sales increased 6% over the third quarter, better than an expected 4.5% increase. In the U.S., comparable-store sales rose by 4.1%, ahead of estimates of 3.4% growth.
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3M Co. (MMM) - Get Report , also part of the Dow, increased 7.6% after better-than-expected quarterly results and higher full-year guidance. Earnings rose to $2.33 a share from $2.15 a year earlier and beat estimates of $2.21 a share. Revenue of $8.17 billion came in higher than an expected $7.92 billion. Industrial sales increased 6.2% to $2.8 billion, ahead of analysts' targets. For fiscal 2017, 3M expects profit of $9 to $9.10 a share, up from $8.80 to $9.05.
Lockheed Martin Corp. (LMT) - Get Report fell 3% despite strong guidance overshadowing a weaker third quarter. The defense company expects full-yea revenue of $50 billion to $51.2 billion, higher than earlier forecasts of $49.8 billion to $51 billion. Full-year earnings are expected to come in between $12.85 and $13.15 a share, up from $12.30 to $12.60 previously forecast. Lockheed Martin reported third-quarter adjusted profit of $3.24 a share, below consensus of $3.26.
General Motors rose 2.6% after adjusted earnings topped estimates and lower revenue beat expectations. Adjusted profit of $1.32 a share came in above estimates of $1.11. Revenue fell nearly 14% to $33.62 billion, though came in ahead of $32.18 billion consensus. GM also said it was profitable in every segment for the first time in three years.
Novartis AG (NVS) - Get Report reported third-quarter earnings that topped estimates on growth from two recently launched drugs -- Cosentyx and Entresto. Novartis reported sales of $12.4 billion in the third quarter, slightly higher than analysts' expectations, while core operating income rose 1% in constant currencies to $2.4 billion. Novartis' American depositary receipts traded in the U.S. fell 1.5% in premarket trading.
Biogen Inc. (BIIB) - Get Report was one of the worst performers on the S&P 500 after U.S. sales of its neuromuscular disorder drug Spinraza missed estimates. Total third-quarter sales of the treatment of $271 million exceeded estimates of $249 million. However, U.S. sales of $197.6 million fell well short of $242 million consensus. The treatment was approved last year.
Biogen's drop weighed on other pharmaceuticals stocks, including AstraZeneca PLC (AZN) - Get Report , Sarepta Therapeutics Inc. (SRPT) - Get Report and MannKind Corp. (MNKD) - Get Report . The iShares Biotechnology Index ETF (IBB) - Get Report dropped 0.5%.
JetBlue Airways Corp. (JBLU) - Get Report reported a decline in quarterly profit following a wave of hurricanes that battered the south and southeast continental U.S. and Puerto Rico. Earnings of 55 cents a share fell from 58 cents a share a year earlier with the hurricanes depressing earnings results by six cents a share. Sales increased 4.7% to $1.81 billion, though fell short of $1.83 billion consensus. Passenger revenue increased 3.3%, though missed estimates, while load factor of 85.1% dipped below consensus of 85.4%.
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Roughly one-quarter of S&P 500 companies have reported earnings so far, the majority of which have bested profit and sales estimates. Analysts anticipate blended earnings growth of 3.8% in the third quarter, or 1.6% excluding energy, according to Thomson Reuters estimates. Revenue is expected to rise by 4.4%.
House Republicans hope to unveil their tax reform bill on Nov. 1, according to CNBC. Investors so far have seen little detail on highly anticipated reform, though the promise of what's to come has supported market gains in recent months. The Trump White House has promised tax cuts for individuals and businesses, but details on how they will pay for them without blowing out the deficit have not been forthcoming.
Manufacturing and services activity both increased in October, according to the latest Markit PMI manufacturing index. A reading on manufacturing rose to 54.5 in October from 52.4, hitting a nine-month high. Services climbed to 55.9, an eight-month high, from 55.3 a month earlier.
Investors were also looking toward the first estimate of third-quarter economic growth to be released on Friday, Oct. 27. A string of severe hurricanes that swept across the south and southeastern portions of the U.S. and Puerto Rico toward the end of the quarter could put a big dent in growth. Economists surveyed by FactSet anticipate the U.S. economy to have grown 2.5% from July to September, slowing from 3.1% growth in the second quarter. This is just a preliminary number -- it will go through two revisions.
Sears Holdings Corp. (SHLD) will no longer sell appliances from Whirlpool Corp. (WHR) - Get Report following a pricing dispute. Sears will stop carrying Whirlpool brands such as Maytag, Kitchenaid, and Jenn-Air, according to an internal Sears memo seen by The Wall Street Journal. The disagreement with Whirlpool was unrelated to credit issues at Sears and instead had to do with pricing, one person familiar with the situation told the Journal.
Whirlpool shares were already lower, down 10%, after a disappointing third quarter and reduced guidance. The appliances maker anticipates fiscal 2017 earnings of $13.60 to $13.90 a share, down from a previous forecast of $14.50 to $15. The company said margins have come under pressure on "raw material inflation, unfavorable price/mix and slow progress on our European integration."
Updated from 1:10 p.m. ET, Oct. 24.
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