Earnings Nudge Wall Street Higher, US Auto Sales Fall

Earnings Nudge Wall Street Higher, US Auto Sales Fall

Wall Street edged higher again today as gains for the tech and industrial sectors countered weakness in auto and energy stocks and investors digested a heavy day of earnings reports.

The Dow Jones Industrial Average rose 36.43 points, or 0.17 percent, to 20,949.89, the S&P 500 gained 2.83 points, or 0.12 percent, to 2,391.16 and the Nasdaq Composite added 3.76 points, or 0.06 percent, to 6,095.37.

The technology sector rose 0.3 percent, its fourth straight day of gains. Industrials gained 0.5 percent, helped by airlines shares after Delta said its passenger unit revenue increased 1 percent in April. Energy shares .fell 0.5 percent as oil prices weakened.

The S&P 500 has climbed 11.8 percent since President Donald Trump's Nov. 8 election, fueled by hopes for his plans for tax cuts, deregulation and infrastructure spending, though investors have questioned his ability to enact his agenda. Overall, profits at S&P 500 companies are estimated to have risen 13.9 percent in the first quarter, the most since 2011. Ford shares dropped 4.4 percent and General Motors fell 2.9 percent, as major automakers posted declines in U.S. new vehicle sales for April. The technicals in general look good for the S&P, as the fundamentals are improving, particularly as the earnings season unfolds.

Investors also were awaiting other significant events later in the week, including Wednesday's expected statement from the Federal Reserve, which began meeting on Tuesday, and Friday's US employment report. The Fed is widely expected to stand pat on interest rates, but may offer hints on the possibility of a rate hike in June.

Meanwhile, the slump in the U.S. auto industry is showing no signs of letting up.

Sales at all six of the biggest automakers in the U.S. dropped again in April, with Ford Motor Co. and Honda Motor Co. posting the steepest declines - about 7 percent each. To make matters worse, each company’s figures fell short of what analysts had estimated, sending the industry to its fourth straight down month after a record sales year in 2016.

The April reports immediately reverberated across the stock market, with Ford closing at its lowest level in more than four years. The selloff also spread to auto-parts makers and car retailers. Analysts said the grim numbers indicate the industry will need to boost discounts and cut production to address swelling inventory on dealer lots, particularly as credit tightens.

 


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