U.S. stocks moved higher Tuesday as a series of stronger-than-expected quarterly earnings, and a modest pullback in Treasury yields, added to recent market strength even amid mounting signals of a slowdown in post-pandemic growth.
Stocks pared some earlier gains, however, after a disappointing reading for September housing starts, which fell 1.6% to an annual rate of 1.555 million units, with permits for new construction slumping 7.7% when compared to August.
Dow components Johnson & Johnson (JNJ) - Get Free Report, Procter & Gamble (PG) - Get Free Report and Travelers Companies (TRV) - Get Free Report reported October quarter earnings prior to the start of trading Tuesday, with Netflix (NFLX) - Get Free Report unofficially kicking-off the start of big tech reports after the closing bell later today.
With investors looking for looking for collective S&P 500 profits to rise 32% from last year to $421.4 billion, with a solid 22.3% growth rate to follow in the fourth quarter, earnings strength has underpinned markets at time when inflation pressures remain stubbornly imbedded and economic growth looks set to slow over the final months of the year.
That growth outlook, however, is triggering a retreat in fund manager sentiment, according to Bank of America's closely-watched survey of the world's biggest asset managers, which showed October cash levels rising to highest levels in twelve months.
Inflation, the survey noted, remains the market's key 'tail risk', followed by weakness in China and a renewed surge in COVID infections over the winter.
Still, a modest pullback in 10-year Treasury note yields, which traded at 1.611% in early New York dealing, and a weaker U.S. dollar are also providing early support Tuesday, with the Dow Jones Industrial Average rising 122 points in the opening hour of trading.
The S&P 500, meanwhile, gained 21 points while the tech-focused Nasdaq Composite was up 55 points.
In terms of individual stocks, Johnson & Johnson shares jumped 2.1% to $163.65 in early trading after the consumer health group posted stronger-than-expected third quarter earnings and boosted its full-year sales forecast.
Procter & Gamble, however, slipped 1.65% as it cautious 2022 outlook offset a stronger-than-expected set of fiscal first quarter earnings.
Atea Pharmaceuticals (AVIR) - Get Free Report shares, meanwhile, collapsed after the drugmaker said its developing COVID treatment -- and a possible challenger to Merck & Co's (MRK) - Get Free Report molnupiravir' -- failed to meet expectations of reducing patient virus levels in critical mid-stage trial.
Merck shares were active, as well, rising 1.8% to $78.55 each following a Reuters report that suggested the World Health Organization would lead the purchase of hundreds of millions of COVID treatments, tests and vaccines that could include the 'molnupiravir' pill.
DraftKings (DKNG) - Get Free Report shares rose 2.4% as the sports betting group faced a 'put up or shut up' deadline on its $22.4 billion approach for British bookmaker Entain.
Away from equities, a modestly weaker U.S. dollar gave oil prices a boost in overnight trading, with WTI futures for November delivery rising 87 cents to $83.31 per barrel ahead of stockpile data from the American Petroleum Institute later in the session.
Brent contracts for December, the global benchmark, rose 69 cents to $85.02 per barrel.
In overseas markets, Europe's Stoxx 600 benchmark added 0.2% by mid-day trading in Frankfurt, while the Asia region MSCI ex-Japan index jumped 1.15% thanks to solid gains for beaten-down tech stocks and a softer U.S. dollar.