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Market Snapshot: Dow, S&P 500 trade at record-high territory Wednesday, with Tesla earnings due after the close

U.S. stock indexes were trading modestly higher midday Wednesday, but the rise on Wall Street was sufficient to push the S&P 500 index and Dow industrials to all-time highs, amid a multiday win streak, as investors parsed third-quarter earnings with the electric-vehicle maker Tesla Inc.
TSLA,
-0.07%

due to report after the market closes.

Investors await the Federal Reserve’s Beige Book at 2 p.m. ET for any signs of rising inflation and supply-chain bottlenecks.

How are stock futures trading?
  • The Dow Jones Industrial Average
    DJIA,
    +0.43%

    was trading 193 points, or 0.6%, higher at around 35,651, exceeding its Aug. 16 closing high at 35,625.40 and carving out a fresh intraday record at 35,657.49 in the process.
  • The S&P 500
    SPX,
    +0.24%

    was climbing 19 points, or 0.4%, at 4,539, with its Sept. 2 closing high at 4,536.95.
  • The Nasdaq Composite Index
    COMP,
    -0.22%

    added 12 points, or less than 0.1%, to around 15,141.88.

On Tuesday, the Dow rose 199 points, or 0.56%, to 35457, the S&P 500 increased 33 points, or 0.74%, to 4520, and the Nasdaq Composite gained 107 points, or 0.71%, to 15129.

What’s driving the market?

U.S. stock benchmarks were back to their record-setting ways, with the Dow and S&P 500 at records and the Nasdaq Composite attempting further advances for a sixth straight gain, as good third quarter corporate earnings helped investors overcome doubts about the impact of the coronavirus delta variant, supply chain disruptions and the Federal Reserve’s likely move to start withdrawing some of its easy-money policies.

“For equity investors, it appears as though investors have forgotten about inflation, higher taxes and other risks that the economy is facing either right now or in the months ahead,” wrote Fawad Razaqzada, market analyst at ThinkMarkets, in a daily research note.

“Concerns over higher prices and lower economic growth—or stagflation—had weighed heavily on the markets in September. But with those losses having been recouped, almost entirely, it appears as though investors are more optimistic about growth than inflation,” the analyst wrote.

Investors are cautiously optimistic, with buying cooling in technology stocks, but a rotation under way into healthcare
XLV,
+1.38%
,
consumer staples
XLP,
+0.86%
,
utilities
XLU,
+1.78%

and real estate
XLRE,
+1.38%
,
with those segments of the market tending to be viewed as defensive sectors, drawing buying when the economic outlook appears uncertain.

Still, Fundstrat Global Advisors lifted its end-year S&P 500 forecast to 4,800 from 4,700. In a note to clients, strategists led by founder Tom Lee said they see a “strong risk-on environment” as under way, helped by a typically strong year-end seasonal pattern that follows October.

The 10-year Treasury note yield at a five-month high has curbed investment in yield sensitive areas, including technology, after Federal Reserve Gov. Christopher Waller on Tuesday said the central bank should begin tapering its monthly purchases of $120 billion in Treasurys and mortgage-related assets starting next month.

Looking ahead, the Fed’s Beige Book of economic conditions will be one to watch, said Saxo Bank’s chief investment officer Steen Jakobsen. In a client note, he said investors should pay special attention to what the report says “about demand relative to the available supply of labor and parts, as well as the status of supply chains and logistics.”

Which companies are in focus?
  • Tesla
    TSLA,
    -0.07%

    shares were up 0.3% in afternoon trade ahead of its quarterly update after regular market hours on Wednesday conclude.
  • Shares of Netflix Inc.
    NFLX,
    -2.69%

    were trading 2.1% lower after the streaming-video company reported a bounce in third-quarter revenue and subscriber numbers, but a slightly disappointing fourth-quarter forecast.
  • Shares of Novavax Inc.
    NVAX,
    -14.01%

    were down 11% Wednesday. Citing sources, Politico reported Tuesday that the biotech group is facing big hurdles in proving it can produce a COVID vaccine that is up to regulatory standards.
  • Shares of Biogen IncBIIB were up on Wednesday after the company beat expectations for the third quarter despite lower-than-expected utilization of Aduhelm, its controversial and closely watched new Alzheimer’s disease treatment. 
  • Shares of Abbott Laboratories ABT rallied 2.7% Wednesday, after the healthcare company reported third-quarter profit and sales that rose well above expectations, with the strongest growth seen in its diagnostics business, and provided an upbeat full-year outlook.
How are other assets faring?
  • The yield on the 10-year Treasury note TMUBMUSD10Y was flat at 1.63%, near its highest since mid May. Yields and debt prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, -0.02%, a measure of the currency against a basket of six major rivals, was down 0.1% at 93.602.
  • Oil futures turned higher, with the U.S. benchmark CL00 up 0.7% at $83.01 a barrel. Gold futures GC00 traded higher, rising 0.9% at $1,787 an ounce.
  • The Stoxx Europe 600 SXXP closed 0.3% higher, while London’s FTSE 100 UKX edged up 0.1%.
  • The Shanghai Composite SHCOMP closed down 0.2%, while the Hang Seng Index HSI gained 1.4% in Hong Kong. Japan’s Nikkei 225 NIK inched up 0.1%.

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