Wall Street rises as earnings whip up risk appetite

(Reuters) – U.S. stock indexes rose on Tuesday as upbeat results from Johnson & Johnson and Travelers fired up risk appetite, after big banks kicked off the third-quarter reporting period on a positive note last week.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 18, 2021. REUTERS/Brendan McDermid

The benchmark S&P 500 index is now less than 1% away from a record high hit in early September, with investors hoping that a flow of better-than-expected earnings reports will push the market to new highs despite concerns about an eventual tightening of monetary policy.

Johnson & Johnson’s shares rose 1.8% as it raised its 2021 adjusted profit forecast, while maintaining the sales outlook for its COVID-19 vaccine this year.

Travelers Cos Inc added 2.6% after the property and casualty insurer beat estimates for third-quarter profit.

Ten of the 11 major S&P 500 sector indexes were trading higher, with healthcare stocks taking the lead.

“We could actually see us hit a new all time high before the end of the year is out because of corporate profits and typical seasonal optimism,” said Sam Stovall, chief investment strategist at CFRA.

Analysts now expect S&P 500 earnings to show a 32.4% rise from a year ago, according to Refinitiv data.

Large-cap technology and communications companies, including Facebook Inc, Apple Inc, Alphabet Inc and Microsoft Corp, rose between 0.6% and 0.9%. Netflix Inc rose 0.4% ahead of its quarterly results later in the day.

Investors are also looking out for warnings from companies that are more exposed to supply chain constraints, price rises and labor shortages.

Procter & Gamble Co fell 1.6%, weighing on the S&P 500 consumer staples sector, as it warned that higher commodity and freight costs would take a bigger bite out of earnings.

Tesla Inc was flat ahead of its quarterly results on Wednesday, with investors watching for indications of its performance in China.

Walmart Inc’s shares rose 2.0% after Goldman Sachs added the world’s largest retailer to its “Americas Conviction List”.

At 9:43 a.m. ET the Dow Jones Industrial Average was up 107.86 points, or 0.31%, at 35,366.47, the S&P 500 was up 17.41 points, or 0.39%, at 4,503.87 and the Nasdaq Composite was up 65.66 points, or 0.44%, at 15,087.47.

The S&P 500 energy sector lagged its peers after oil prices turned negative, retreating from gains earlier in the day. [O/R]

Among others, Atea Pharmaceuticals Inc plunged 71.5% after its experimental COVID-19 antiviral pill, being developed with Roche, failed to help patients with mild and moderate COVID-19.

Drugmaker Merck & Co Inc, which has already applied for U.S. authorization for its COVID-19 pill, rose 1.8% after the news on Atea. Pfizer Inc, due to report data for its antiviral as soon as this quarter, gained 1.6%.

Advancing issues outnumbered decliners by a 1.82-to-1 ratio on the NYSE and by a 1.79-to-1 ratio on the Nasdaq.

The S&P index recorded 27 new 52-week highs and one new low, while the Nasdaq recorded 37 new highs and 28 new lows.

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