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Financial Markets 10/21 15:27
NEW YORK (AP) -- The Dow Jones Industrial Average hit a record on Tuesday as
the floodgates opened for companies reporting how much profit they made during
the summer.
The Dow rose 218 points, or 0.5%, and topped its prior all-time high, which
was set early this month. The S&P 500 index, which is much more important on
Wall Street and dictates the performance of many more 401(k) accounts, was
essentially flat and finished 0.3% below its own record, while the Nasdaq
composite slipped 0.2%.
3M helped drive the Dow to its record after reporting bigger profit for the
latest quarter than analysts expected. Its stock had the biggest jump in price
among the 30 companies that make up the average.
In the more representative S&P 500 index, General Motors helped lead the way
and rallied 14.9% after reporting stronger quarterly results than analysts
expected, while also raising its forecasts for some full-year financial
targets. CEO Mary Barra said it's moving quickly to reduce its losses in 2026
and beyond for its electric-vehicle business, as "it is now clear" that EV
adoption will be lower than planned.
RTX, the aerospace and defense company, rose 7.7%, and Coca-Cola climbed
4.1% after they likewise reported profit for the latest quarter that topped
Wall Street's profit expectations.
Warner Bros. Discovery leaped 11% after the company said it's now
considering other options besides its previously announced split of Discovery
Global off Warner Bros., ones that could be more profitable for shareholders.
The company said it may be changing course after hearing from "multiple
parties" interested in either the entire company or Warner Bros.
Keeping the market in check were drops for some Big Tech stocks, which lost
momentum following their own big rallies. A 2.4% drop for Google's parent
company, Alphabet, from its all-time high was among the heaviest weights on the
S&P 500. So were Broadcom's 1.9% fall and Nvidia's 0.8% decline.
All told, the S&P 500 edged up by 0.22 to 6,735.35 points. The Dow Jones
Industrial Average rose 218.16 to 46,924.74, and the Nasdaq composite slipped
36.88 to 22,953.67.
Other big recent winners in financial markets also took a pause. The price
of gold fell 5.7% from its latest record, dropping back to $4,109.10 per ounce.
It's still up nearly 56% for the year so far.
The pressure is on companies to show that their profits are growing
following a torrid rally of 35% for the S&P 500 from a low in April. It's one
way they can justify their high stock prices amid criticism that they're too
expensive.
Corporate earnings reports have also gained importance because they offer
some details on the strength of the U.S. economy when the U.S. government's
shutdown has delayed important economic updates. The delays are making the job
of the Federal Reserve more difficult, as it tries to decide whether high
inflation or the slowing job market is the bigger issue for the economy.
Despite the shutdown, the Commerce Department will release its report on for
U.S. consumers Friday, which could help guide the Fed's policy on what to do
with interest rates. It's the government's first data release since the
shutdown began on Oct. 1.
In stock markets abroad, indexes rose across much of Europe and Asia.
Japan's Nikkei 225 added 0.3% and crept closer to the 50,000 level as
conservative lawmaker Sanae Takaichi became the country's prime minister.
Investors expect her to push for lower interest rates and other policies that
could help the market.
Indexes rose 1.4% in Shanghai and 0.7% in Hong Kong amid expectations that
President Donald Trump will meet with Chinese President Xi Jinping later this
month during a regional summit. That's raised hopes for an easing of trade
tensions between the world's biggest economies.
In the bond market, the yield on the 10-year Treasury eased to 3.95% from
4.00% late Monday.
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AP Business Writers Matt Ott and Elaine Kurtenbach contributed.
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