By Clive McKeef

S&P 500 now just 0.29% from its record close hit July 15

Stocks closed higher Tuesday on news of progress on U.S. - China trade talks, an announcement of a While House and Congressional deal on the federal budget and debt ceiling and good corporate earnings.

Better-than-expected earnings from Dow Jones Industrial Average components, Coca-Cola and United Technologies reported before the market opened also helped stocks rise for a second day.

How are the major benchmarks faring?

The Dow Jones Industrial Average closed up 177 points at 27,349, while the S&P 500 index advanced 20 points to 3,005 and the Nasdaq Composite Index ended up 47 points at 8,251.

The Dow saw its second highest close ever after two days of gains and ended at the highest since July 15. The S&P 500 ended at its third highest ever and is now just 0.29% from its record close of 3014.30 hit Monday, July 15, 2019.

But including Tuesday, the DJIA has not had a 1% move in either direction for 24 consecutive trading days, the longest such streak since August-October 2018 when it went 30 days without a 1% move. Similarly, the S&P 500 has not had a 1% move in either direction for 31 trading days, the longest such streak since June-October 2018 when it went 74 days without a 1% move.

What's driving the market?

Talks between China and the U.S. would start Monday as U.S. negotiators headed to China, Bloomberg reported (https://www.bloomberg.com/news/articles/2019-07-22/asian-stocks-set-for-modest-gains-oil-advances-markets-wrap?srnd=premium). The U.S. delegation will be led by Trade Representative Robert Lighthizer and will be in China through Wednesday. Earlier the Hong Kong based South China Morning Post (http://www.marketwatch.com/story/us-trade-negotiators-likely-to-visit-china-next-week-report-2019-07-23)also reported that U.S. trade negotiators were likely to visit China next week.

The world's two largest economies have been locked in a trade war that has seen 25% tariffs imposed by President Donald Trump on $200 billion of Chinese products. China has retaliated with their own tariffs prompting fears of a global economic slowdown.

Stocks got support earlier in the day from news congressional leaders announced a budget deal (http://www.marketwatch.com/story/trump-says-compromise-deal-on-budget-debt-ceiling-reached-2019-07-22) with the White House that will also raise the federal government's debt ceiling. If approved by both the House and Senate, the deal likely would avoid a repeat of the government shutdowns that plagued Washington in early 2018 and again at the beginning of 2019.

"This morning's announcement of the deal between Congress and the White House to suspend the debt ceiling for the next two years is undiluted good news," Brad McMillan, Chief Investment Officer for Commonwealth Financial Network said. "With an agreement that the government can borrow to spend the money that it has already committed to spending, we can avoid a totally unnecessary, politically driven crisis that could have caused real economic damage."

Better-than-expected earnings from Dow Jones Industrial Average components, Coca-Cola (KO) and United Technologies (UTX) reported before the market opened also helped stocks rise for a second day.

More than 18% of S&P 500 companies have posted quarterly numbers this earnings season. Of those companies more than 78% have reported better-than-expected profits, according to FactSet data. Those companies have also seen their earnings grow by an aggregate of 3.6%.

Visa , Chipotle (CMG), and Snap (SNAP) are due to report earnings after the market close Tuesday.

Earnings reporting season rolls on this week with companies including Amazon.com , Alphabet (GOOGL), Caterpillar (CAT), McDonald's (MCD) and (BA) still to report.

Wall Street also expects the Federal Reserve to lower interest rates by at least 25 basis points when it meets at the end of July, and economists expect the European Central Bank to cut rates at its meeting Thursday.

The International Monetary Fund said in its World Economic Outlook (http://www.marketwatch.com/story/imf-cuts-its-global-growth-forecasts-again-2019-07-23)report that the global economy is expected to expand by 3.2% in 2019, down 0.1 percentage points from its April forecast and 0.3 percentage points below the estimate at the start of the year.

The IMF cited concerns about the ongoing U.S.-China trade war and noted that "global technology supply chains were threatened by the prospect of U.S. sanctions, Brexit-related uncertainty continued, and rising geopolitical tensions roiled energy prices."

Read:Brace yourselves for Britain's new prime minister -- here's how markets may react (http://www.marketwatch.com/story/brace-yourselves-for-britains-new-prime-minister---heres-how-markets-will-react-2019-07-22)

Which stocks are in focus?

Dow-members Coca-Cola Co.(KO) saw its shares climb to a record after reporting better-than-expected earnings (http://www.marketwatch.com/story/coca-cola-earnings-get-a-jolt-from-ready-to-drink-costa-coffee-2019-07-23)and raising its revenue forecast.

United Technologies Corp.(UTX), also a Dow component, beat earnings forecasts also and raised its full year outlook for earnings and revenue.

Apple Inc. (AAPL) shares rose, following a report in the Wall Street Journal (https://www.wsj.com/articles/apples-and-intels-no-brainer-deal-11563900798?mod=searchresults&page=1&pos=1)that it is in "advanced talks' to buy Intel Corp.'s smartphone-modem chip business, valued at $1 billion. Apple stock rose 2.3% Monday, the best performing stock in the Dow (http://www.marketwatch.com/story/stock-futures-point-to-higher-start-ahead-of-earnings-deluge-2019-07-22). Intel shares advanced 0.9%.

Shares of Biogen Inc.(BIIB) were also on the rise after the company topped earnings forecasts and raised its outlook (http://www.marketwatch.com/story/biogens-stock-jumps-after-big-earnings-beat-raised-outlook-2019-07-23).

Lockhead Martin Corp. (LMT) stock fell, even after the aerospace and defense manufacturer surpassed analyst expectations for second-quarter profits and sales (http://www.marketwatch.com/story/lockheed-martin-shares-climb-premarket-after-earnings-beat-2019-07-23).

Shares of Snap Inc. (SNAP) were up, after Stifel analyst John Egbert upgraded the stock (http://www.marketwatch.com/story/snap-stock-gains-after-stifel-upgrades-ahead-of-earnings-2019-07-23) from buy to hold, ahead of the social media company's second-quarter earnings results, due after the close of trade Tuesday.

How are other markets trading?

The 10-year U.S. Treasury note rose 3 basis points to 2.07%. The benchmark note yield has edged up for three days to its highest since July 16.

Oil futures reversed earlier losses on Tuesday to tally a gain for the session, a day ahead of data that are expected to reveal a sixth consecutive weekly decline in U.S. crude supplies. West Texas Intermediate crude for September rose 55 cents, or 1%, on the New York Mercantile Exchange to $56.77 a barrel.

In Asia overnight Monday, stocks closed mostly higher, with China's CSI 300 index rising 0.2%, Japan's Nikkei 225 adding 1% and Hong Kong's Hang Seng index climbing 0.3%. European stocks rallied 1.1%, according to the Stoxx Europe .

 

(END) Dow Jones Newswires

July 23, 2019 16:29 ET (20:29 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.
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