Stocks head higher for fourth day
NEW YORK — The stock market nudged higher Tuesday, putting it on track for a fourth day of gains, as investors waited for more quarterly results from companies.
Investors are turning their attention to corporate earnings after spending much of the last month preoccupied with the outlook for the Federal Reserve's stimulus.
Alcoa was the first major company to announce second-quarter results. The aluminum maker late Monday reported a second-quarter loss that wasn't as big as financial analysts' expected. The company benefited from strong demand for aluminum used in autos and airplanes, although that was offset by weaker prices.
Traders weren't blown away by the results, though. After initially rising, the stock fell 4 cents, or 0.6 percent, to $7.88 by midday.
Along with the latest quarterly results, investors want to see how confident companies are about the rest of the year, said Cam Albright, director of asset allocation for Wilmington Trust Investment Advisors.
Major U.S. stock indexes have notched a series of all-time highs this year on expectations that earnings will remain at record levels.
"A lot of what the market has justified its advances on is a strong second-half for the economy and a strong second-half for earnings," said Albright. "It's important that we see verification of that."
Analysts at investment bank Goldman Sachs said in a note Tuesday that they expected second-quarter earnings growth of about 2 percent. They predicted that revenue growth would remain weak, however, hurt by a lackluster economy and a stronger dollar.
The Dow Jones industrial average rose 69 points, or 0.4 percent, to 15,294 as of 12:22 p.m. Eastern Daylight Time. The Standard & Poor's 500 index gained nine points, or 0.6 percent, to 1,649. The Nasdaq composite rose 16 points, or 0.5 percent, to 3,501.
Investors on Tuesday bought companies that grow the most when the economic outlook is bright. Industrial companies notched the biggest gains among the 10 sectors in the S&P 500. Phone companies, which investors turn to when the outlook is gloomier, were the only sector to fall.
In another sign of investor confidence, the Russell 2000 gained 6 points, or 0. 6 percent, to 1,015. The index of small-company stocks has gained 3.8 percent in July and is at record levels.
The index has risen more this year than the Dow and the S&P 500. The gains suggest that investors are becoming more comfortable in taking on riskier investments.
"When you see that leadership from the smaller caps that's probably a good sign overall for the bigger blue chips to potentially follow suite," said Ryan Detrick, a senior technical strategist at Schaeffer's Investment Research. "People are leaving the more defensive areas."
The Russell 2000 has gained 19.5 percent since the start of the year, compared to a rise of 16.6 percent for the Dow and a gain of 15.7 percent for the S&P 500.
Among individual stocks, a handful of medical companies were the top decliners in the S&P 500.
Intuitive Surgical, a maker of robotic surgery systems, plunged $88.19, or 18 percent, to $411.89 after the company forecast disappointing second-quarter sales late Monday. Laboratory Corp. of America fell $4.27, or 4.3 percent, to $95.86. Varian Medical Systems, a maker of medical devices and software for treating cancer, fell $2.06, or 3 percent, to $66.14.
IBM fell $3.39, or 1.7 percent, to $191.60 after a Goldman Sachs analyst lowered his rating and cut his price target on the stock, saying the company may face more pressure in the near term in emerging markets.
Corporate America's quarterly results should give Wall Street fresh fodder after investors and traders spent most of June trying to figure out where the Fed was headed with its economic stimulus program.
The central bank has been buying $85 billion in bonds a month to keep interest rates low and encourage borrowing and spending. Comments from Fed Chairman Ben Bernanke that the central bank planned to reduce the stimulus prompted the stock market to pull back from record levels reached in late May.
In government bond trading, the yield on the 10-year Treasury note was little changed at 2.64 percent early Tuesday. The yield has pulled back after surging to 2.74 percent Friday, its highest level in almost two years, after the government reported strong hiring for June.
In commodities trading, the price of oil rose 17 cents, or 0.2 percent to $103.33 a barrel. Gold rose $12, or 1 percent, to $1,246.90.
Among stocks making big moves:
— WD-40 rose $3.13, or 5 percent, to $60.77 after the maker of maintenance products reported earnings that beat financial analysts' forecasts.
— Barnes and Noble rose 64 cents, or 3.6 percent, to $18.32 after the bookseller said Monday its CEO is leaving after three years. The company didn't name a replacement.