The Dow and benchmark S&P 500 have crept higher after some of the country’s top lenders including Morgan Stanley and Bank of America reported upbeat earnings for the second quarter.
Bank of America added 3.1 per cent as the lender posted a 20 per cent surge in second-quarter profit and Morgan Stanley gained 4.8 per cent after beating analysts’ expectations for quarterly results.
“So far the banks have come out fairly well, which is not all that unexpected,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.
US Federal Reserve’s rapid interest rate hikes helped some of the largest US banks, including JPMorgan Chase and Wells Fargo, record a profit boost that pointed towards a resilient economy.
“But we can’t really assume that it’s going to be the same (upbeat results) for all companies across the board,” said Pavlik.
PNC Financial Services lowered its forecast for full-year net interest income (NII) on Tuesday while brokerage Charles Schwab posted a smaller than expected drop in quarterly profit.
Shares of Charles Schwab jumped 13.2 per cent, leading gains on the S&P 500, and those of PNC rose 2.6 per cent.
Overall earnings across industries are expected to decline 8.1 per cent for the quarter, according to Refinitiv data.
The S&P 500 banks index has fallen 3.9 per cent so far this year, in the aftermath of a banking crisis that took down three lenders and pummelled the sector, underperforming the S&P 500 index that has notched a 17.8 per cent gain in the same period.
In early trading on Tuesday, the banking index was up 1.1 per cent.
Lockheed Martin added 1.1 per cent after the weapons maker raised its annual profit and sales outlook on strong demand for military equipment, stoked by ongoing geopolitical uncertainties.
In early trading, the Dow Jones Industrial Average was up 141.63 points, or 0.41 per cent, at 34,726.98, the S&P 500 was up 3.12 points, or 0.07 per cent, at 4,525.91, and the Nasdaq Composite was down 43.61 points, or 0.31 per cent, at 14,201.34.
Eight of the top 11 S&P 500 sectors advanced with industrials leading gains while technology stocks fell 0.6 per cent.
Wall Street rallied last week after consumer prices and producer prices data provided evidence that the economy had entered a disinflation phase, stoking hopes that the US Federal Reserve will soon end its monetary policy tightening.
Meanwhile, domestic retail sales, reported on Tuesday, rose less than expected in June, though consumer spending appeared to be solid, which likely kept the economy afloat in the second quarter.
Pinterest gained 4.0 per cent as Evercore ISI upgraded its rating on the stock to “outperform”.
Advancing issues outnumbered decliners by a 2.39-to-1 ratio on the NYSE and a 1.56-to-1 ratio on the Nasdaq.
The S&P index recorded 20 new 52-week highs and no new lows while the Nasdaq recorded 65 new highs and 33 new lows.