The Dow Jones Industrial Average traded above 23,000 on Wednesday, Oct. 18, and hit a record intraday high as strong earnings from International Business Machines Corp. (IBM) - Get Report pushed the blue-chip index higher.
The Dow was up 0.5% on Wednesday to 23,112. The S&P 500 added 0.08%, and the Nasdaq traded flat. The S&P 500 and Nasdaq notched record intraday highs earlier in the session.
IBM surged nearly 9% after the technology giant reported stronger-than-expected third-quarter earnings late Tuesday. IBM posted adjusted earnings of $3.30 a share on revenue of $19.2 billion. Analysts polled by FactSet were projecting adjusted earnings of $3.28 on revenue of $18.6 billion.
Contributing heavily to the third-quarter revenue beat was IBM's Cognitive Solutions segment, which contains a big portion of its software operations. Revenue in the segment rose 3.9% to $4.4 billion, topping estimates and representing a turnaround from a decline of 2.5% in the second quarter.
On the earnings call, Chief Financial Officer Martin Schroeter suggested revenue in IBM's seasonally strong fourth quarter would be about $2.8 billion to $2.9 billion higher than in third quarter.
Less than 10% 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 4.4% in the third quarter, or 2.3% excluding energy, according to Thomson Reuters estimates. Revenue is expected to rise by 4.4%.
The health care sector set up for more gains on Wednesday, benefiting from high hopes over a bipartisan deal to continue subsidies for insurance companies. Sens. Lamar Alexander and Patty Murray reached a deal on Tuesday afternoon to continue cost-sharing reduction payments, a crucial part of the Affordable Care Act, for two more years. The deal would give states more flexibility under the ACA.
The sector fell late last week after President Donald Trump cut off subsidies to insurance companies as a way to undermine Obamacare and then railed against drugmakers for "getting away with murder." Trump and congressional Republicans have worked to repeal the ACA first through legislation, a process that failed to deliver the votes, and now by executive order.
Supervalu Inc. (SVU) shares traded higher 2.2% to $19.80 on Wednesday after the company reported third-quarter earnings that beat expectations and announced an acquisition. The wholesale distributor reported adjusted per-share earnings of 46 cents, topping analyst expectations of 36 cents. Supervalu reported retail comps declined 3.5%, but its wholesale segment remained strong on sales from recently acquired Unified Grocers. In the earnings report, Supervalu announced it has acquired Associated Grocers of Florida for $180 million.
GoPro Inc. (GPRO) - Get Report stock gained about 4.4% after Longbow Research riased its rating for the stock to buy from neutral. Longbow analysts said the recent GoPro selloff is overdone and there's room for earnings upside moving into 2018.
Anthem Inc. (ANTM) - Get Report said Wednesday that it will sign onto a deal with CVS Health Corp. (CVS) - Get Report to contract the drugstore chain's services for a new pharmacy benefits manager called IngenioRx. CVS will take over services for Anthem's benefits manager program in 2020, when Anthem's current contract with Express Scripts Holding Co. (ESRX) runs out.
The deal with CVS effectually confirmed that Anthem is ending its contractual relationship with Express Scripts, though that was widely expected to happen. Following Anthem's announcement, shares traded higher over 4% Wednesday. CVS stock was slightly up by 0.3%.
Housing starts for September showed surprise weakness. The Census Bureau reported starts at 1.127 million last month, weakening from 1.18 million in August. Analysts expected the measure to dip to 1.17 million. Building permits came in at 1.215 million, below 1.3 million in the previous month. Economists expected permits at 1.238 million. Hurricanes in Texas, Louisiana and Florida in the past weeks likely affected activity.
The economic calendar on Wednesday also includes the Federal Reserve's latest "Beige Book" at 2 p.m.
Crude oil prices were slightly higher on Wednesday following a weekly reading on U.S. stockpiles from the Energy Information Administration that showed crude stockpiles fell by 5.7 million barrels.
Inventories have seen large swings since late August when Hurricane Harvey disrupted refinery processing in Texas and Louisiana.
The potential for conflict in Iraq threatened to cut off exports and sent crude stocks higher at the beginning of the week. Reports indicated Iraqi forces had descended upon Kirkuk, a major oil-producing region in Iraq. Troubles in the region have risen since a referendum in with the Kurds voted for independence.
West Texas Intermediate crude oil was up 0.4% to $52.09 on Wednesday.
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