Wall Street opens at record on strong earnings

A street sign near the New York Stock Exchange in New York.
A street sign near the New York Stock Exchange in New York.PHOTO: AFP

NEW YORK (REUTERS) - US stock indexes opened at record highs on Wednesday following a set of strong quarterly earnings, led by Boeing and AT&T, while investors awaited the outcome of a two-day Federal Reserve meeting.

Boeing rose 7 per cent, boosting the Dow, while AT&T's 3.8 per cent gain made it the top stock on the S&P 500. Both companies posted quarterly profit that topped analysts'estimates. The market's record run has left equities relatively expensive, but a strong corporate earnings season should allay some of those concerns.

Earnings of the S&P 500 companies are expected to have climbed 9.1 per cent in the second quarter, up from an 8 per cent rise estimated at the start of the month, according to Thomson Reuters I/B/E/S.

The S&P 500 is trading around 18 times earnings estimates for the next 12 months, well above its long-term average of 15 times. Investors will also focus on the Fed's statement, which is due at 2 p.m. ET (2 a.m. Singapore time Thursday morning). Although the central bank is not likely to raise interest rates, it is expected to discuss its monetary policy stance and the timing of a long-awaited balance sheet reduction.

"Many questions still remain unanswered over both the timings and pace of rate hikes, which may weigh on the minds of Fed watchers ahead of the rate decision," said Lukman Otunuga, analyst with FXTM. "Any unexpected surprises from the policy statement may come in the form of inflation concerns as the central bank acknowledges the fall in inflation and the impact it has on reaching its 2 per cent inflation target."

At 9:36 a.m. ET, the Dow Jones Industrial Average was up 95.55 points, or 0.44 per cent, at 21,708.98 and the S&P 500 was up 2.24 points, or 0.09 per cent, at 2,479.37.

The Nasdaq Composite was up 14.26 points, or 0.22 per cent, at 6,426.44.

Seven of the 11 major S&P sectors were higher, with the telecommunications index's 2.8 per cent rise leading the gainers. Advancing issues outnumbered decliners on the NYSE by 1,292 to 1,154. On the Nasdaq, 1,212 issues rose and 943 fell.