New Yoyk: Encouraging results from health care and materials companies lifted US stocks on Tuesday, but weak earnings from Goldman Sachs limited gains in a market skeptical of the growth outlook.
Investors were reluctant to make big bets as the market readied for a spate of high-profile earnings. Volume was extremely low, with 6.56 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year’s daily average of 8.47 billion.
Johnson & Johnson was one of the first major names to rally following results this season, rising 3.7% to $62.69 after it raised its profit outlook. The health care giant was the Dow’s top%age gainer.
Offsetting that was Goldman Sachs Group Inc, which fell 1.2% to $151.89 after posting a steep profit drop as trading revenue fell, the latest in a number of underwhelming reports from banks. The investment bank also warned that there were fewer opportunities to make money in the current environment.
“Unless the performance of financials and tech stocks improves, then I think the market could be in store for a correction,” said Marshall Front, chairman and chief investment officer oft Front Barnett Associates in Chicago. “These are important groups that point towards future economic activity.”
The S&P Financial Index is down 3.8% from a recent high reached on 7 April, while the S&P Information Technology Index is down 2% over the same period.
Materials were the S&P’s top%age gainers a day after Steel Dynamics forecast strong growth, lifting other steelmakers. The stock rose 5.7% to $18.46 while US Steel Corp climbed 4.5% to $52.74. The S&P Materials Index rose 1.8%.
The Dow Jones industrial average gained 65.16 points, or 0.53%, to 12,266.75 at the close. The Standard & Poor’s 500 Index added 7.48 points, or 0.57%, to 1,312.62. The Nasdaq Composite Index advanced 9.59 points, or 0.35%, to 2,744.97.
The market seemed to have moved past Monday’s surprising announcement that Standard & Poor’s was revising its outlook downward on the United States credit rating.
“People are acknowledging that it is still very unlikely that there could be a downgrade of the U.S., but still there are a lot of concerns about what could happen with all these government debt problems,” said Charles Bobrinskoy, vice chairman of Ariel Investments LLC in Chicago, which oversees about $5.5 billion.
Home builders’ shares also rose after government data showed US housing starts and permits for future home construction rose more than expected in March.
The Dow Jones US home construction index rose 2.2%. PulteGroup rose 5.1% to $8.24 and KB Home added 3.2% to $11.66.
Texas Instruments Inc warned late Monday of slower-than-usual quarterly sales growth, citing damage to its factories in Japan after the huge earthquake there in March. The chipmaker’s stock fell 0.7% to $34.54.
About two stocks rose for every one that fell on the New York Stock Exchange, while on the Nasdaq, the number of advancers only slightly exceeded the number of decliners.