Dow nears 22,000 as earnings drive stock records

The Dow had its sights on the 22,000 milestone on Tuesday, as stocks continued their record run amid strong corporate earnings.

The Dow Jones Industrial Average jumped 72.8 points, or 0.3%, to 21,963, a fresh all-time high. The S&P 500 climbed 6.1 points, or 0.2%, to 2,476. The Nasdaq Composite gained 14.8 points, or 0.2%, to 6,362.

Stocks have consistently hit new record highs in 2017 with investors showing confidence in the Trump administration’s economic and tax policies, particularly an expected cut to corporate rates as part of a broader tax reform plan. The market has also received support from robust profits. Earnings season is in full swing, and positive results from Dow members such as Boeing (NYSE:BA), Caterpillar (NYSE:CAT) and McDonald’s (NYSE:MCD) have lifted the blue-chip index over the last week. U.S. corporations are projected to report a second straight quarter of double-digit earnings growth, according to the Thomson Reuters data.

The Dow traded as high as 21,990 during the session, a new intraday record.

Sean Lynch, co-head of global equity strategy at Wells Fargo Investment Institute, said investor confidence from healthy earnings may continue to drive stocks higher.

“Fundamentals and earnings drive markets over the long run,” he wrote in a recent note to clients, “and they look to be improving.”

However, the market’s record run has also increased risk to the downside.

“Historically low rates have helped to prop up equity valuations, but with the Fed looking to raise rates and other global central banks expected to tighten in the coming years, equity investors need to be mindful of the potential impact on valuations,” Lynch said.

Market sentiment also got a boost last week with the first reading of second-quarter GDP. The U.S. economy grew a solid 2.6% during the April through June period, a faster pace than the first quarter’s 1.4% growth.

Consumer spending, which helped fuel economic growth in the latest quarter, slowed in June. The Commerce Department on Tuesday revealed that spending edged 0.1% higher, down from 0.2% in May. Incomes were flat, the worst performance since November.

Construction spending declined 1.3% in June following a modest 0.3% gain in May, according to the Commerce Department.

The yield on the 10-year Treasury note ticked lower to 2.253% from 2.292%.

Nymex West Texas Intermediate oil settled $1.01 lower, or 3%, at $49.16 a barrel. Brent crude, the international benchmark, fell 1.7% to $51.80 in recent trading.

In corporate news, shares of General Motors (NYSE:GM) and Ford (NYSE:F) fell after automakers reported a weaker month of sales in July.

Under Armour (NYSE:UAA) cut its earnings forecast and announced 280 layoffs, saying it is looking toward new product launches to fuel growth after 2017. Shares were down 8.6% on Tuesday.

Sprint (NYSE:S) rallied 11.1% on the mobile company’s second-quarter profit. Although Charter Communications (NASDAQ:CHTR) isn’t interested in a merger, Sprint said it could “strike a deal” soon.