U.S. oil prices jump to highest level in more than 2 years; Fed rate call due
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U.S. stock-market indexes traded in record territory after opening gains on Wednesday on the back of strong corporate results and hopes for tax cuts out of Washington.
Markets were also buoyed by a rebound in private-sector employment (http://www.marketwatch.com/story/adp-says-235000-jobs-added-in-october-2017-11-01)last month as employers added 235,000 jobs. An upbeat set of manufacturing data from China, as well as a rally in oil prices, which continued to push above a two-year high supported global equity markets.
What are stocks doing?
The S&P 500 advanced 12 by points, or 0.5%, to 2,587.37, setting an intraday record at 2,587.49. Energy and financials were leading the gains, while utilities lagged.
Read:Wall Street's strong October suggests happy holidays ahead--and beyond (http://www.marketwatch.com/story/wall-streets-strong-october-suggests-happy-holidays-aheadand-beyond-2017-10-31)
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Also see:Why the stock-market rally may be entering the anxiety-driven stage (http://www.marketwatch.com/story/and-now-for-the-fomo-portion-of-the-stock-market-rally-2017-10-31)
The Nasdaq Composite Index added 28 points, or 0.5%, to 6,756 and set an intraday record at 6,759.66.
The Dow Jones Industrial Average gained 117 points, or 0.5%, to 23,496, trading above its previous closing record.
The upbeat mood comes after U.S. stocks closed higher on Tuesday (http://www.marketwatch.com/story/nasdaq-ready-to-lead-us-stocks-up-end-october-on-a-high-note-2017-10-31), closing out October on a positive note, with their biggest monthly percentage gains since February.
What's driving the markets?
A whole range of things. First, all the earnings season has been strong, with 75% of the S&P companies that have reported so far beating earnings estimates, according to FactSet data.
Hopes for pass of a tax package that includes corporate tax cuts has also provided support. The tax bill was planned for release on Wednesday, but has been postponed by a day (http://www.marketwatch.com/story/house-gop-delays-tax-bill-plans-to-keep-top-individual-rate-of-396-2017-10-31) to iron out unresolved issues. The Republicans plan to drop the corporate tax rate to 20% and delay a planned repeal of estate tax, according to people close to the matter.
Check out:8 most important things to know about the GOP tax plan (http://www.marketwatch.com/story/8-most-important-things-to-know-about-the-gop-tax-plan-2017-11-01)
Additionally, all eyes are on the Federal Reserve. The central bank is widely expected to keep rates on hold, but keep the door open for a December rate hike, when it announces its policy decision at 2 p.m. Eastern Time Wednesday.
Read:Fed statement may have treats for both hawks and doves (http://www.marketwatch.com/story/fed-statement-may-have-treats-for-both-hawks-and-doves-2017-10-27)
The rate decision, however, is likely to be overshadowed by speculation of who will become the next Fed chair. U.S. President Donald Trump is expected to name his pick on Thursday, with all indications so far pointing to current Fed Governor Jerome Powell as the choice.
Outside the U.S., traders welcomed the latest Caixin China manufacturing purchasing managers index reading, which showed factory activity in the world's second largest economy continued to expand at a steady pace in October (http://www.marketwatch.com/story/china-caixin-manufacturing-pmi-holds-steady-2017-10-31).
What earnings are in focus?
In another busy day on the earnings calendar, Estée Lauder Cos (http://www.marketwatch.com/story/estee-lauders-stock-rallies-after-revenue-beat-upbeat-outlook-2017-11-01).(EL) climbed 11% and Clorox Co (http://www.marketwatch.com/story/clorox-earnings-and-revenue-beat-estimates-2017-11-01).(CLX) added 3% after each beat revenue estimates.
New York Times Co.(NYT) reported earnings above expectations thanks to increase in digital subscriptions, but shares dropped 2.8%.
Allergan PLC(AGN) reported profit and revenue ahead of Wall Street forecasts, but shares, which were higher premarket, dropped nearly 5%.
And after the market closes, Facebook Inc.(FB), Tesla Inc.(TSLA) and Kraft Heinz Co.(KHC) are on the docket. Qualcomm Inc.(QCOM), MetLife Inc.(MET) and Allstate Corp.(ALL) are also expected to release earnings after hours.
Read:Tesla earnings--Model 3 production, demand under the microscope (http://www.marketwatch.com/story/tesla-earnings-model-3-production-demand-under-the-microscope-again-2017-10-25)
And see:EarningsWatch: Apple, Tesla and Facebook are post-Halloween treats (http://www.marketwatch.com/story/earningswatch-apple-tesla-and-facebook-are-post-halloween-treats-2017-10-30)
Which stocks are in focus?
Shares of United States Steel Corp.(X) jumped 14% after the steelmaker's quarterly results and outlook out late Tuesday topped Wall Street estimates (http://www.marketwatch.com/story/us-steel-shares-rally-on-earnings-beat-outlook-2017-10-31).
Electronic Arts Inc.(EA) dropped 5% after the video-game maker reported a second-quarter loss (http://www.marketwatch.com/story/electronic-arts-shares-drop-in-the-extended-session-after-second-quarter-results-2017-10-31) after Tuesday's closing bell.
Envision Healthcare Corp.(EVHC) tumbled 32% after hospital company late Tuesday revealed weaker than expected earnings and said it would review strategic alternatives (http://www.marketwatch.com/story/envision-healthcare-plummets-after-earnings-miss-may-consider-sale-2017-10-31) that could include a sale.
What are strategists saying?
"Investor sentiment is generally strong right now and with progress being made on tax reform, the momentum remains with the rally at the moment. Risks obviously remain, but until they rear their ugly head once again, which I'm sure they will, these gradual and consistent gains can easily continue," said Craig Erlam, senior market analyst at Oanda, in emailed comments.
"The U.S. stock markets have got many reasons to attract global investors at the moment. A strong and sustained positive trend since a year, backed by solid 3Q earnings and spiced up with optimism on tax reforms," said Ipek Ozkardeskaya, senior market analyst at London Capital Group
"Facebook earnings release is due later today and the expectations are positive in the continuation of a solid 3Q earnings season. My only concern is the conflict among the Republicans regarding the tax reforms. If we do not hear anything concrete within a couple of days, the optimism could leave its place to a correction," she said in emailed comments.
What economic data are in focus?
Private-sector employment bounced back in October as employers added 235,000 jobs, ADP reported Wednesday.
The Markit manufacturing PMI for the same month came in at 54.6. The October ISM manufacturing index and September construction spending data are due at 10 a.m. Eastern.
Monthly auto sales numbers will trickle out through the day.
What are other markets doing?
Oil prices continued to rally (http://www.marketwatch.com/story/us-oil-jumps-to-2-year-high-on-signs-opec-deal-is-working-2017-11-01) on optimism that the OPEC deal to cut production is working. West Texas Intermediate crude oil up 1.2% at $55.02 a barrel, to trade around the highest level since the summer of 2015.
Gold was also rising, up 0.5% at $1,276.70 an ounce.
In currencies, the pound jumped to $1.3301 from $1.3283 late Tuesday in New York. The upbeat sterling mood came on signs London and Brussels are determined to make progress in the Brexit talks, while investors also looked ahead to the Bank of England's policy meeting on Thursday. The U.K. central bank is widely expected to raise interest rates for the first time in more than a decade (http://www.marketwatch.com/story/5-things-investors-need-to-know-as-the-bank-of-england-prepares-for-historic-rate-hike-2017-10-31).
The dollar traded mixed against other major currencies, with the ICE Dollar Index up 0.1% at 94.614.
Stocks in Asia closed firmly higher (http://www.marketwatch.com/story/nikkei-kospi-jump-more-than-1-to-lead-asia-pacific-stock-gains-2017-10-31), and European markets (http://www.marketwatch.com/story/european-stocks-leap-to-2-year-high-as-commodity-shares-march-up-2017-11-01) mirrored the same mood.
(END) Dow Jones Newswires
November 01, 2017 09:58 ET (13:58 GMT)