Wall Street reached a record high on Tuesday, pushing through concerns about the potential economic drag from rising interest rates and elevated oil prices. The S&P 500, the world’s most widely tracked stock index, rose 0.6 percent, surpassing its previous peak set in August. It is the latest in a series of new highs reached this year, taking the index’s gain since January to more than 14 percent.
Despite the record high, there remains broader consternation in financial markets tied to the ongoing war with Iran and a rapid rise in the benchmark government bond yields. Those higher yields lead to higher borrowing costs for consumers and companies. The 10-year Treasury yield eased lower to 5.27 percent on Tuesday, still trading around its highest level in roughly two decades. Oil prices held steady, with Brent crude, the international benchmark, at around $100 a barrel.
Fueling Tuesday’s record are expectations of another round of strong financial results from publicly traded companies. Some of the most robust profits are expected in the energy sector, tied to the rise in oil prices, and in the technology sector, where the build out of artificial intelligence is fueling economic growth. “This bull market is about nothing but earnings growth,” said Michael Purves, founder of Tallbacken Capital. He said he expected the stock market to continue rising through the end of the year, even if interest rates and oil prices also keep rising.
More than 70 companies in the index have steered investors to raise their earnings expectations for the recent quarter ahead of officially releasing their results in the coming weeks. That marks a record for the number of companies giving positive guidance, according to Fact Set, which has tracked such data over two decades. These strong projections reflect companies’ ability to turn giant profits in the face of higher borrowing costs.
Source: New York Times Top Stories · Summarized by HeadlinesBriefing