Stocks moved broadly higher in midday trading on Wall Street Wednesday as large U.S. companies continued to surprise investors with solid profits.
Earnings reporting season is more than a third of the way through and the results have been tempering investors’ worst fears about a severe profit slump. Earnings are down about 0.3% so far for S&P 500 companies. That’s far better than the 4% drop expected just a few weeks ago.
Technology giant Apple beat forecasts, despite another quarter of slumping revenue as iPhone sales struggle. Chipmaker Advanced Micro Devices also beat forecasts. The solid results from both companies helped send other technology stocks higher.
Johnson Controls and Harris led gains in industrial stocks after reporting surprisingly strong profits of their own. Banks and financial companies also rose.
Health care stocks leveled off after an early decline as the strength of CVS’ stellar results offset concerns about Amgen. The drugmaker did report solid profit results but also a surge in costs and falling sales of its cancer drug Neulasta. The health care sector has lagged far behind the rest of the market so far this year, up just 3% versus a 28% surge for technology stocks.
Safe-play sectors like utilities and energy also fell.
Traders will get to hear from the Federal Reserve later Wednesday, when the central bank’s policymakers issue another update on interest rate policy and their view on the U.S. economy.
The central bank will likely reaffirm a message that has reassured investors since the start of the year: No rate hikes are likely anytime soon. The low-rate policy is helping to keep borrowing costs down and supporting an economy that’s growing steadily.
KEEPING SCORE: The S&P 500 index rose 0.3% as of 11:45 a.m. The Dow Jones Industrial Average rose 0.4%, or 95 points, to 26,686. The Nasdaq composite rose 0.6%.
APPLE BEAT: Apple rose 7.1% after its first quarter results beat Wall Street forecasts. Apple’s sales are still shrinking as iPhone demand weakens, however. Revenue fell 5%. It marks the first time in two and a half years that revenue fell in consecutive quarters.
Still, the company raised its dividend and signaled that the revenue slide could level off in the current quarter.
CRUISING ALONG: Cruise line operator Royal Caribbean Cruises rose 7.4%. The company said booking rates and volumes helped push revenue higher, along with more demand for onboard activities. The company did warn investors that damage to a ship from a crane accident in the Bahamas will shave about 25 cents per share from its full-year profit forecast.
HEALTHY COVERAGE: CVS Health jumped 5.7% after the company reported a 42% surge in quarterly profits, blowing past Wall Street’s forecasts. The company also raised its profit forecast for the year.
The nation’s second-largest drugstore chain bought health insurer Aetna late last year for $69 billion. That investment seems to have paid off. The Aetna deal gave CVS a new line of business with 23 million customers.
BROKEN TAP: Beer maker Molson Coors, which trades under the ticker symbol “TAP,” fell 6.3% after a slump in volume weighed down revenue.
The company, which makes both Molson and Coors, reported revenue and profit below Wall Street forecasts. Sales did edge higher in the U.S., but it wasn’t enough to offset declines in Europe and the rest of the world.