Dow, S&P 500 rise again, nearing all-time records
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NEW YORK (AFP) - The Dow and S&P 500 again rose on Wednesday (Oct 20), narrowly missing records, following a wave of generally good earnings that have eased worries about inflation and clogged supply chains.
A report by the Federal Reserve said transport constraints and shortage of goods caused "significantly elevated prices" in most areas of the United States, slowing economic growth.
But with the latest batch of corporate results, investors are becoming more confident that higher consumer prices will not derail the recovery.
"We believe that the stock market has more to climb in this bull market and that some of the Covid-19 headwinds are receding," said Mr Chris Zaccarelli, chief investment officer for Independent Advisor Alliance.
While inflation is rising, it means "many companies continue to have pricing power, which should preserve corporate profits", he said, referring to a dynamic mentioned in the Fed's beige book report on the economy.
The Dow Jones Industrial Average, which touched an all-time record, finished with a gain of 0.4 per cent at 35,609.34.
The broad-based S&P 500 gained 0.4 per cent to end at 4,536.19, less than a point from an all-time high. But the tech-rich Nasdaq Composite Index shed 0.1 per cent to 15,121.68.
"October is a reversal of September because we're finding that the economy is strong," said Mr Jack Ablin, chief investment officer at Cresset Capital. "Companies are very profitable. I think it was really the financials that got everyone's attention."
Among individual companies, Netflix dropped 2.2 per cent despite reporting results that topped expectations as global streaming hits like Squid Game drew viewers in droves.
The pullback comes on the heels of gains earlier in 2021 and as the streaming giant contends with fallout over a recent Dave Chappelle comedy special that activists say is harmful to the transgender community.
A few dozen Netflix workers staged a walkout and rally on Wednesday in Los Angeles, calling for better representation at the Hollywood powerhouse.
Verizon climbed 2.5 per cent after earnings topped analyst expectations on broadband subscriber growth.
Pinterest jumped 12.8 per cent amid reports of possible takeover talks by online payment service provider PayPal. PayPal dropped 4.9 per cent.
Biogen shed 0.6 per cent after reporting sales of just US$300,000 (S$403,000) in new Alzheimer's disease drug Aduhelm, a fraction of the US$12 million expected by analysts.
