Better-than-expected earnings from industry leaders including Caterpillar (CAT - Get Report) and McDonald's (MCD - Get Report) pushed the Dow Jones Industrial Average to log triple-digit gains for the second day in a row, its best two-day stretch of the year.
The Dow added 1.2%, or 254 points. The S&P 500 was up 0.67%, also enjoying its best back-to-back gains in the year to date, while the Nasdaq climbed 0.8% to 6,030.
The Nasdaq topped the psychologically milestone of 6,000 for the first time Tuesday, reaping the rewards of a broader market rally that pushed the tech-heavy index up 11% since the beginning of the year and nearly 22% over the past 12 months. Tech industry leaders including Apple (AAPL - Get Report) , Amazon (AMZN - Get Report) and Facebook (FB - Get Report) have contributed to recent gains. The Nasdaq first hit 5,000 in March 2000, the tail-end of the dotcom bubble. It took less than a year for the Nasdaq to move from 4,000 to 5,000.
Dow component Caterpillar was the biggest contributor to gains on the blue-chip index as solid demand translated to a strong quarterly performance. Net income of $1.28 a share soared past Wall Street estimates of 62 cents a share. Revenue of $9.82 billion came in higher than a target of $9.27 billion. For the full year, Caterpillar expects earnings of $3.25 a share on $38 billion to $41 billion in sales. The stock rose more than 7%.
Fellow Dow component McDonald's also contributed to major gains. The world's largest burger chain earned $1.47 a share over its recent quarter, up from $1.25 a share and higher than analysts' target of $1.33 a share. Comparable sales increased 1.7% in the U.S. as its all-day breakfast offerings continued to fuel traffic. Global comparable sales increased 4% compared to an expected increase of 1.3%. The stock rose 5%.
DuPont (DD - Get Report) , also on the Dow, rose more than 2% Tuesday after posting stronger-than-expected first-quarter profit and guiding for first-half operating earnings to rise 16% as it grows agricultural sales following its $130 billion merger with Dow Chemical (DOW) . Operating earnings for the first three months of the year were $1.64 a share, the company said, well ahead of the consensus forecast of $1.38 and up 28.1% from the same period last year. Revenue for the first quarter was $7.7 billion, DuPont said, ahead of the market forecast of $7.5 billion and a 5% increase from the first three months of last year.
New home sales surged to an eight-month high in March as low inventory and high demand continued to propel the housing market higher. Sales increased by 5.8% to a seasonally adjusted pace of 621,000, the second-highest pace since 2008. The solid showing was a positive sign that the spring selling season began with strong momentum.
U.S. home prices continued to climb in the three months ending February, showing off their highest gains in nearly three years. The S&P/Case-Shiller 20-city index increased by 5.9% over the three-year period, increasing from a pace of 5.7% over the three months to January. Analysts anticipated growth of 5.8%.
Homebuilder stocks were in the red, though, as news of a tariff on Canadian softwood lumber imports overshadowed positive economic data for the sector. Commerce Secretary Wilbur Ross announced Monday that the U.S. would impose preliminary anti-subsidy duties averaging 20% on imports from Canadian lumber exporters. Tariffs were tied to a trade suit filed with the Commerce Department by lumber trade association, the Committee Overseeing Action for Lumber International Trade Investigations or Negotiations (COALITION).
"The dispute is one more step in a long-standing softwood trade dispute between the two countries," Barclays analysts wrote in a note. "Although the administration has made trade and trade dispute settlement a priority and although we continue to believe that the administration is likely, at some point, to wield its trade powers more broadly than in prior administrations, the specific action announced yesterday seems to us to be "business as usual" in our trading and trade dispute relations with other countries."
Elsewhere on the earnings calendar, Novartis (NVS - Get Report) added 2% after narrowly beating forecasts for its first quarter and committing to full-year guidance. Net income for its March-ended quarter of $2.69 billion came in higher than $2.67 billion consensus, though fell 3.5% from a year earlier. Revenue of $11.54 billion was in line with estimates. Novartis said sales of psoriasis drug Cosentyx and heart failure treatment Entresto offset generic erosion.
Fellow drugmaker Eli Lilly (LLY - Get Report) fell 3% after swinging to a quarterly loss and reducing its full-year profit guidance. The company swung to a net loss of 10 cents a share over its first quarter compared to profit of 41 cents a share a year earlier. Adjusted earnings of 98 cents a share beat by 2 cents. Full-year guidance was reduced to $2.60 to $2.70 a share from previous forecasts of $2.69 to $2.79 a share, a lower result tied to one-time cost-cutting expenses.
Rite Aid (RAD - Get Report) climbed 4% after updating investors on its "lengthy merger process" with Walgreens Boots Alliance (WBA - Get Report) and reporting a better quarter than anticipated. CEO John Standley said the merger with Walgreens was "having a negative impact" on its performance. Both companies agreed to extend the merger deadline to July 31. The pharmacy chain also reported adjusted break-even results for the quarter, a surprise to investors looking for a loss of 4 cents a share.
Lockheed Martin (LMT - Get Report) reported a weaker first quarter and warned of a worse full-year performance than previously anticipated. The defense company earned $2.61 a share over its recent quarter, down from $2.91 a share a year earlier and below consensus of $2.79. Sales of $11.1 billion fell short of targets by $100 million. Full-year earnings guidance of $12.15 to $12.45 a share was lowered by a dime at the low- and high-end.
Coca-Cola (KO - Get Report) fell short of earnings estimates over its first quarter. Net income of 27 cents a share slid from 34 cents in the same period a year earlier, while adjusted earnings of 43 cents a share missed by a penny. Revenue of $9.12 billion came in higher than estimates of $8.89 billion. The soda company anticipates adjusted earnings over the full year to decline by 1% to 3%.
T-Mobile (TMUS - Get Report) was higher after posting an increase in customers over its first quarter and profit well above expectations. The telecom added more than 1.1 million new customers over its recent three-month period, while net income of 80 cents a share surged past consensus of 34 cents. Revenue of $9.6 billion was in line with estimates.
Alcoa (AA - Get Report) reported a mixed first quarter, topping estimates on its bottom line but falling short on sales. Adjusted net income of 63 cents a share exceeded estimates by a dime. Revenue of $2.66 billion came in $300 million under targets.
So far this earnings season, 27% of S&P 500 companies have reported on their recent quarterly performance. Of those that have reported, nearly 78% have exceeded first-quarter earnings estimates, above the historical average of 64%. Companies have had generally weaker performances on the topline with 64% topping consensus, beating out the historical average of 59% by a narrower margin.
Consumer confidence weakened in April at a faster pace than anticipated, though still held near a 12-year high. The Conference Board's metric decreased to a reading of 120.3 in April, down from 124.9 in March. Analysts anticipated a reading of 123.1. The March figure was revised down from 125.6. Fewer consumers described business conditions as "good," while confidence in the labor market faltered.
Congress continues to scramble to avoid a government shutdown this week by pushing through a continuing resolution. Negotiations likely will intensify on Friday ahead of the deadline at midnight, April 28. Office of Management and Budget Director Mick Mulvaney has said that money for President Trump's proposed border wall must be part of the spending bill Congress will look to pass, a major conflict for Democrats in opposition to the expensive project.
France's position in the European Union looked a little more secure on Monday following the first round of voting in the French presidential election. A vote for the status quo lit a fire under European markets and led to Wall Street's best day in nearly two months. Stock gains pulled the three U.S. indexes into the green for April, while the Nasdaq scored a new record and closed just 16 points from its 6,000 level.
Express Scripts (ESRX) slumped 12% as it prepared to lose its largest client, Anthem (ANTM - Get Report) . Anthem had sued Express Scripts in the past, claiming it had been overcharged. Now Express is saying it is not likely Anthem will renew its contract once it ends in 2019.