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Market Snapshot: S&P 500 climbs higher on good earnings reports despite supply chain disruptions

U.S. stocks rose Tuesday afternoon, adding to the largest four-day stretch of gains since late July for both the S&P 500 index and Nasdaq Composite, with companies reporting good third-quarter earnings despite the spread of the coronavirus delta variant and supply chain disruptions.

What are major indexes doing?
  • The Dow Jones Industrial Average
    DJIA,
    +0.45%

    rose 173 points, or 0.5%, to 35,432.
  • The S&P 500
    SPX,
    +0.69%

    gained 30 points, or 0.7%, to trade at about 4,517.
  • The Nasdaq Composite
    COMP,
    +0.75%

    climbed 108 points, or 0.7%, to nearly 15,130.

On Monday, the Dow Jones Industrial Average edged down 0.1%, while the S&P 500 rose 0.3% and the Nasdaq Composite advanced 0.8%. The S&P 500 and Nasdaq Composite have each seen their best four-day winning stretch since July 23.

What’s driving the market?

Equities are moving higher as good corporate earnings have largely overshadowed worries about supply chain disruptions, though investors are watching to see how higher costs for energy and raw materials are affecting profit margins.

According to Bank of America, through the first week, 66% of companies beat Wall Street forecasts on both sales and earnings per share, which is well above the historical average of 47%.

“This earnings season could be highly important for investors, as inflation, labor, supply, and currency risks settle in,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments, in a note. “We expect strong results as earnings reports so far indicate that many large U.S. companies have generated higher profitability despite rising labor costs, thanks to sustained sales growth.”

Results came in ahead of the opening bell from Dow components Procter & Gamble Co.
PG,
-1.67%
,
Johnson & Johnson
JNJ,
+2.24%

and Travelers Cos. Inc.
TRV,
+2.01%
,
while streaming giant Netflix Inc.
NFLX,
+0.08%

is due to report after the close.

“We don’t have a clear picture yet” of the extent inflationary pressures may be weighing on profit margins, said Jon Maier, chief investment officer of Global X, in a phone interview Tuesday. He pointed to Procter & Gamble’s report as a sign of the headwinds that companies may be facing from higher freight and commodity costs.

See: Procter & Gamble Faces $2.3 Billion in Cost Headwinds. The Stock Is Falling

Meanwhile, construction on new homes has slowed amid supply-chain woes. U.S. home builders started construction on homes at a seasonally-adjusted annual rate of 1.56 million in September, a 1.6% decrease from the previous month, the U.S. Census Bureau reported Tuesday. The pace of permitting for new housing units also slowed in September, dropping 7.7% from August.

Several Federal Reserve officials are due to speak Tuesday.

On the crypto front, the first U.S. bitcoin futures exchange-traded fund from ProShares began trading on the New York Stock Exchange Tuesday under the ticker BITO
BITO,
+3.40%
.
Shares of the ETF were up more than 3% at $41.38 by early afternoon.

Bitcoin BTCUSD was up almost 3% Tuesday afternoon at about $63,231, trading near an all-time high.

Read: A ‘spot’ bitcoin ETF ‘ain’t so great’, says ProShares strategist ahead of provider’s futures-linked fund

Also see: The 2 reasons bitcoin could surge by 170% to $168,000 by year-end as crypto-linked ETFs roll out

Which companies are in focus?
  • Johnson & Johnson shares rose 2.5% after the drugmaker said it brought in $502 million in world-wide sales of its COVID-19 vaccine in the third quarter of 2021.
  • Shares of Procter & Gamble fell 1.7% after the consumer packaged goods company reported fiscal first-quarter profit that fell versus last year, but topped forecasts for earnings and sales while maintaining its full-year guidance.
  • Travelers Cos. Inc. delivered results that beat estimates. Shares of the insurer were up 3.6%.
  • Apple Inc.
    AAPL,
    +1.37%

    shares rose 1.7%, a day after unveiling new Mac personal computers featuring the company’s custom chips and an upgraded set of AirPods to fill out its holiday lineup.
  • Shares of Tesla Inc.
    TSLA,
    +0.15%

    ticked up 0.6% Tuesday, the day before it is slated to report third-quarter results. The stock has rallied 10.8% over the past six sessions, closing Monday at its highest price since Feb. 2, and just 1.5% below the Jan. 26 record close of $883.09.
  • Philip Morris International Inc.
    PM,
    -1.46%

    shares declined 1.2% after the cigarette and tobacco company reported third-quarter profit and revenue that rose above expectations as overall shipment volume increased. 
  • Shares of Kansas City Southern
    KSU,
    +0.37%

    edged up 0.2% after the railroad operator reported third-quarter profit that fell short of expectations.
What are other markets doing?
  • The yield on the 10-year Treasury note
    TMUBMUSD10Y,
    1.631%

    rose about 4 basis points to 1.63%. Yields and debt prices move in opposite directions.
  • The ICE U.S. Dollar Index
    DXY,
    -0.26%
    ,
    a measure of the currency against a basket of six major rivals, fell 0.3%.
  • Oil futures pushed higher in choppy trade, with the U.S. benchmark
    CL00,
    +1.14%

    up 1.5% at $83.69 a barrel. Gold futures
    GC00,
    +0.23%

    moved higher, up 0.2% at $1,768.90 an ounce.
  • The Stoxx Europe 600
    SXXP,
    +0.33%

    closed 0.3% higher, while London’s FTSE 100
    UKX,
    +0.19%

    rose 0.2%.
  • The Shanghai Composite
    SHCOMP,
    +0.70%

    rose 0.7%, while the Hang Seng Index
    HSI,
    +1.49%

    gained 1.5% in Hong Kong. Japan’s Nikkei 225
    NIK,
    +0.65%

    advanced 0.7%.

—Steve Goldstein contributed to this report.

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