Strong earnings lifts US stocks despite worries over global growth

U.S. stocks rose on Wednesday, as strong earnings from IBM, United Technologies and Procter & Gamble led a rebound for Wall Street from its second-biggest decline in 2019. International Business Machines Corp jumped 8.78 per cent and led the gains on the Dow Jones Industrial Average after the technology services company projected 2019 profit above expectations. Gains in shares of IBM also lifted the S&P technology sector, which rose 1.19 per cent.

A 6.65 per cent rise in United Technologies Corp, which reported a better-than-expected quarterly profit, helped push the S&P industrials sector 1.05 per cent higher. Fellow industrial companies Boeing Co, Caterpillar Inc and 3M Co rose between 0.5 per cent and 1.2 per cent.

Wall Street's gain follows a more than 1 per cent loss on Tuesday on worries about global growth due to a gloomy economic outlook from the International Monetary Fund, signs of further cooling in China's economy and mixed reports on U.S.-China trade talks. "Given a day like yesterday, a bounce driven by earnings is not unusual," said Michael Antonelli, managing director, institutional sales trading at Robert W. Baird in Milwaukee.

"UTX, being an industrial company, is definitely something investors are looking at for hints on the impact of a global economic slowdown. The fact that it provided a strong forecast just shows the U.S. economy is actually solid." Easing some concerns about trade talks, White House economic adviser Kevin Hassett said he believed the United States and China could reach a trade deal by a March 1 deadline.

At 9:56 a.m. ET the Dow Jones Industrial Average was up 283.95 points, or 1.16 per cent, at 24,688.43, the S&P 500 was up 18.80 points, or 0.71 per cent, at 2,651.70 and the Nasdaq Composite was up 58.66 points, or 0.84 per cent, at 7,079.02. Despite the pullback on Tuesday, the benchmark S&P 500 index is less than 10 per cent away from its record closing high on Sept.20 and has climbed about 6 per cent this year.

Procter & Gamble Co rose 5.98 per cent, helping the consumer staples sector rise 1.41 per cent after its quarterly revenue beat Wall Street expectation. The biggest decliner in the sector was Kimberly-Clark Corp, which fell 1.96 per cent after its quarterly profit missed analysts' estimates due to rising raw materials costs and a strong U.S. dollar.

The communication services sector rose 0.93 per cent on a 6.35 per cent gain in cable services provider Comcast Corp, which beat analysts' estimates for revenue on lower-than-expected video subscriber losses. Abbott Laboratories dropped 1.36 per cent after the healthcare company missed quarterly revenue estimate due to lower sales of generic drugs in emerging markets and gave a downbeat forecast for the current quarter.

Of the 61 S&P 500 companies that reported until Tuesday, 78.7 per cent have beat Wall Street's profit estimates and that is above the historical average of 64 per cent, according to Refinitiv data. However, earnings growth estimates have dropped to 14.1 per cent from 20.1 per cent at the start of October.

Advancing issues outnumbered decliners by a 2.83-to-1 ratio on the NYSE and by a 2.83-to-1 ratio on the Nasdaq. The S&P index recorded three new 52-week highs and no new lows, while the Nasdaq recorded 11 new highs and 14 new lows.