During Tuesday’s trading, stocks continued to rise and the S&P 500 inched closer to a record high that was set earlier this year. The strong market seems to be boosted by strong corporate earnings which are easing global trade concerns.
The S&P 500 Rose 0.4% to 2,862 with both energy and financials outperforming. Meanwhile, the Dow Jones Industrial Average gained 165 points as Caterpillar rose over 2%. The Nasdaq Composite also advanced as much as 0.4% as Alphabet stock gained 2.1%.
Following Monday’s close, the S&P 500 was only 0.8% away from reaching an all-time high of 2,872.87, which had been set on Jan 26th. The tech heavy Nasdaq was also closing in coming withing 1% of their record high while the Dow was over 4.2% away from reaching their all time high.
The Cboe Volatility Index (VIX), which is considered to be the best fear gauge in the market, fell to 10.52, which is its lowest level since Jan 16th, when it hit a low of 10.40.
“The earnings season has been good and that’s helped investors realize there are strong fundamentals to justify the high prices,” said Bruce McCain, chief investment strategist at Key Private Bank. “The other thing is people get used to worries over time,. We’ve had trade concerns for a while and now they don’t seem as bad.”
Stocks’ overseas moves come as a stronger-than-expected earnings season has eased the global trade war concerns. As of now, eighty percent of all S&P 500 companies have reported their quarterly results, and have posted better-than-expected earnings leaving them on target to be the highest beat rate since Fact Set began tracking them in 2008.
Up to Friday, S&P 500 earnings are up 24% in the second quarter on a year-over-year basis. Some of the major companies who have reported better-than-expected earnings are Apple (AAPL 211,75 +2,60 +1,24%) and Amazon (AMZN 1.962,46 +61,64 +3,24%). Meanwhile, Dow constituent Disney is expected to report earnings after closing bell today. Today Disney’s shares rose 0.9%, and their recent acquisition of 21st Century Fox will likely be a key component in their earnings report today.
“I think in terms of a report card, we can give it an A,” said Art Hogan, chief market strategist at B. Riley FBR. “Corporate earnings have been strong, but we’ve also seen strength in revenue.”
“When you think about what’s driving markets right now, it’s a tug of war between solid U.S. fundamentals and concerns around trade,” Hogan said. “When you think about trade with China, it feels like the situation is escalating. But with Mexico, Canada and the European Union, it seems like it’s heading in the right direction.”
Just last week, China threatened retaliatory tariffs on around $60 billion worth of U.S. goods ranging from 5% to 25%. This came mere days after US President Donald Trump had spoken to the U.S. Trade representative, Robert Lighthizer, asking him to increase the levies placed on $200 billion worth of Chinese goods from 10% to 25%.
In editorials over recent days the Chinese media is claiming that the Asian nation has remained “constrained” and “rational” in its counter response to America, especially in light of the levies that have been recently threatened. Late Monday, Chinese media also said that they “will not surrender” to “U.S.trade blackmail.”