S&P 500, Nasdaq hit record highs on earnings boost; Fed angst prevails
2 November 2021, 16: 36
The S&P 500 and the Nasdaq indexes hit record highs on Tuesday, helped by a slew of strong earnings reports, although gains were limited as investors remained cautious ahead of the Federal Reserve's widely expected move to start tapering its monthly bond purchases.
Shares of Under Armour Inc (NYSE:UAA) jumped 17.3% after the athletic apparel maker raised its annual revenue and profit forecasts.
Simon Property Group (NYSE:SPG) added 5.2% after the mall operator raised its 2021 forecast for profit and quarterly dividend.
Arista Networks (NYSE:ANET) surged 23.5% to scale new peak as brokerages raised their price targets on the cloud infrastructure supplier's stock following strong third-quarter results.
Five of the 11 major S&P sectors advanced in early trading, with real estate rising the most.
After Australia's central bank on Tuesday abandoned an ultra-low target for bond yields, opening the door for an earlier hike in cash rates, the spotlight now turns towards the Fed's policy meeting starting Tuesday.
The U.S. central bank on Wednesday is expected to approve plans to scale back its pandemic-era support for the world's largest economy, while focus will also be on commentary about interest rates and how sustained the recent surge in inflation is.
"The Fed has been very good at telling people in advance what they are going to do and we expect no surprises tomorrow, but we also see the market move ahead of the Fed's plan to price in higher rate hikes if it doesn't see cooling of inflation," said Rick Meckler, partner at Cherry Lane Investments in New Jersey.
"The normal rotation that we see from growth to value as interest rates get higher has been very muted so far ... the interest remains high for most of the FAANG stocks and really technology as a whole."
Mega-cap technology names Microsoft Corp (NASDAQ:MSFT) and Google-owner Alphabet (NASDAQ:GOOGL) Inc edged higher to help offset declines of 1.5% in shares of Tesla (NASDAQ:TSLA) Inc after top boss Elon Musk said the company had not signed a contract with Hertz.
Tesla's stock closed at a record high on Monday and has gained nearly 18% since the company's market value crossed $1 trillion last week.
An unprecedented amount of monetary and policy stimulus has helped Wall Street bounce back strongly from a pandemic-driven recession last year. Coupled with that, a largely upbeat third-quarter reporting season has also helped drive U.S stocks to record highs this week.
At 9:59 a.m. ET, the Dow Jones Industrial Average was up 6.08 points, or 0.02%, at 35,919.92, the S&P 500 was up 11.11 points, or 0.24%, at 4,624.78, and the Nasdaq Composite was up 34.14 points, or 0.22%, at 15,630.05.
Pfizer Inc (NYSE:PFE) gained 1.5% after the drugmaker raised its full-year sales forecast for the company's COVID-19 vaccine to $36 billion.
Declining issues outnumbered advancers for a 1.35-to-1 ratio on the NYSE and for a 1.57-to-1 ratio on the Nasdaq.
The S&P index recorded 34 new 52-week highs and three new lows, while the Nasdaq recorded 107 new highs and 17 new lows.