The Dow Jones Industrial Average looked set to march past the 23,000 milestone, and stay past that mark, on Wednesday, Oct. 18, as International Business Machines Corp. (IBM) saw a big bump following quarterly results.
Dow futures were up 0.3% on Wednesday morning. S&P 500 futures added 0.14% and Nasdaq futures increased 0.08%.
The Dow posted a new record on Tuesday, Oct. 17, on the strength of earnings from UnitedHealth Group Inc. (UNH) and Johnson & Johnson (JNJ) . The blue-chip index briefly attained a level above 23,000, a milestone never seen before, but failed to close above that mark. The S&P 500 also secured a closing record.
IBM surged 6.6% in premarket trading after the technology giant reported stronger-than-expected third-quarter earnings. 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.
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.
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. ET.
Crude oil prices were slightly higher on Wednesday ahead of a weekly reading on U.S. stockpiles from the Energy Information Administration at 10:30 a.m. ET. 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 0.3% to $52.05 on Wednesday morning.
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