Stocks Close Higher Following Upbeat Earnings News - U.S. Commentary

(RTTNews) - Following the pullback seen in the previous session, stocks moved back to the upside during trading on Wednesday. The gains on the day lifted the Dow and the S&P 500 to new record highs, while the tech-heavy Nasdaq showed an even stronger upward move to reach its best levels of 2016.

The major averages all closed higher, although the Nasdaq outperformed its counterparts by a wide margin. While the Nasdaq jumped 53.56 points or 1.1 percent to 5,089.93, the Dow edged up 36.02 points or 0.2 percent to 18,595.03 and the S&P 500 rose 9.24 points or 0.4 percent to 2,173.02.

The strength on Wall Street partly reflected a positive reaction to the latest earnings news from big-name companies such as Microsoft (MSFT) and Morgan Stanley (MS).

Shares of Microsoft showed a substantial upward move after the software giant released its fiscal fourth quarter results after the close of trading on Tuesday.

Microsoft surged up by 5.3 percent after reporting better than expected earnings and revenues due in part to strong cloud business.

Financial giant Morgan Stanley also moved to the upside after reporting second quarter results that exceeded analyst estimates.

Additionally, shares of Cintas (CTAS) moved sharply higher on the day after the uniform maker reported better than expected fourth quarter results and provided upbeat guidance.

Household products maker Tupperware (TUP) also saw significant strength after reporting second quarter results that exceeded analyst estimates.

Meanwhile, shares of Halliburton (HAL) moved to the downside after the oil service giant reported a second quarter loss due in part to the breakup fee for its failed deal to buy Baker Hughes (BHI).

Sector News

With Microsoft leading the way higher, software stocks saw substantial strength on the day. The Dow Jones Software Index surged up by 2.9 percent to its highest levels in over sixteen years.

Along with Microsoft, German software developer SAP (SAP) posted a standout gain after reporting stronger than expected second quarter earnings growth.

Considerable strength was also visible among biotechnology stocks, as reflected by the 2.6 percent gain posted by the NYSE Arca Biotechnology Index. Agios (AGIO) and Acadia Pharmaceuticals (ACAD) turned in two of the best performances.

Semiconductor stocks also showed a strong move to the upside, driving the Philadelphia Semiconductor Index up by 1.6 percent. With the gain, the index reached its best closing level in over a year.

Marvell Technology (MRVL) led the semiconductor sector higher, jumping by 14.1 percent after reporting better than expected fourth quarter earnings.

Networking, internet, and computer hardware stocks also saw notable strength, contributing to the sharp increase by the tech-heavy Nasdaq.

On the other hand, gold stocks came under pressure on the day, dragging the NYSE Arca Gold Bugs Index down by 6.3 percent. The weakness in the sector comes as gold for August delivery slid $13 to $1,319.30 an ounce.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in another mixed performance during trading on Wednesday. Japan's Nikkei 225 Index dipped by 0.3 percent, while Hong Kong's Hang Seng Index jumped by 1 percent.

Meanwhile, the major European markets all moved to the upside on the day. While the U.K.'s FTSE 100 Index rose by 0.5 percent, the French CAC 40 Index surged up by 1.2 percent and the German DAX Index spiked by 1.6 percent.

In the bond market, treasuries moved moderately lower amid the strength on Wall Street. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.2 basis points to 1.580 percent.

Looking Ahead

Earnings news is likely to remain in focus on Thursday, with American Express (AXP), eBay (EBAY), and Intel (INTC) among the companies due to release their quarterly results after the close of today's trading.

General Motors (GM), Travelers (TRV), and Union Pacific (UNP) are also due to report their results before the start of trading on Thursday.

Trading may also be impacted by reaction to the outcome of the European Central Bank's first monetary policy meeting following Britain's vote to leave the European Union.

The ECB is expected to leave policy unchanged but offer signals that additional stimulus is coming if the economy weakens in response to the so-called Brexit.

Following several quiet days on the U.S. economic front, traders will also be presented with reports on weekly jobless claims, existing home sales, and Philadelphia-area manufacturing.