US stocks tick higher

US stocks inched higher in late trade, as investors parsed the latest batch of corporate earnings.

some analysts caution that expectations for continued increases in corporate profits could limit gains moving forward. (AP Photo/Richard Drew)

US stocks inched higher Wednesday, as investors parsed the latest batch of corporate earnings.

The S&P 500 rose 0.1 per cent after snapping a five-session winning streak Tuesday. The Dow Jones Industrial Average advanced 14 points, or less than 0.1 per cent, to 23571, and the Nasdaq Composite was recently up 0.2 per cent, after swinging between small gains and losses earlier in the session.

Broad-based earnings growth has helped propel major indexes to fresh all-time highs this year. Although some analysts caution that expectations for continued increases in corporate profits could limit gains moving forward, many investors say they expect major indexes to continue rising.

More than 85 per cent of S&P 500 companies have reported third-quarter results as of Wednesday morning, with roughly three-quarters of them beating earnings expectations, according to FactSet. Per-share earnings at the firms have grown about 6.4 per cent in the third quarter from the year-earlier period.

“That’s a deceleration from what we’ve had, but for 2018, I don’t think people are backing off what we project,” said Jeremy Bryan, a portfolio manager at Gradient Investments.

The largest company in the S&P 500 hit another milestone Wednesday after reporting its best quarterly growth in two years last week. Apple shares rose to a new high, making the iPhone maker the first public U.S. company to ever reach a market value of $900 billion.

Shares of Snap, which isn’t in the S&P 500, fell 18 per cent after its quarterly results fell short of expectations. Shares were down as much as 20 per cent in after-hours trading Tuesday, but pared declines after the company disclosed that Chinese tech giant Tencent Holdings bought a 12 per cent stake.

Roku, another high-profile technology firm that went public this year, is scheduled to report earnings for the first time as a public company after the market closes Wednesday.

Humana shares shed 5.3% after the health insurer said profit fell in its latest quarter, as the firm trimmed its workforce and earnings from its health-care-services business dropped.

Time Warner was also among the biggest decliners in the S&P 500. Shares fell 4.4 per cent after a top AT&T executive warned for the first time that the company is unsure about the timing of its planned takeover of Time Warner.

Bank shares continued to lag behind Wednesday, hit by a shrinking gap between short and long-dated bond yields. The US yield curve, or the gap between two and 10-year Treasury yields, is at its flattest since 2007, according to strategists at Deutsche Bank. The S&P 500 financial sector fell 0.3 per cent.

Lower long-term government bond yields and a flatter yield curve tend to hurt lenders’ profits, since banks earn money on the difference between what they pay on deposits and what they charge to lend money.

Long-dated bond yields have come under modest pressure in recent sessions amid concerns that disagreements could force the GOP to make changes to its tax bill and slow down plans to pass it by the year’s end.

A year after the US presidential election, investors have realised that anything related to tax reform will take longer and look different than what was initially discussed, said Jonathan Mackay, investment strategist at Schroders.

“We do see a high probability for a tax cut, but it will probably be different from what we’ve seen from the Republican plan so far,” he said.

The yield on the 10-year US Treasury note rose to 2.322 per cent Wednesday, according to Tradeweb, from 2.309 per cent. Yields rise as bond prices fall.

The Stoxx Europe 600 declined less than 0.1 per cent.

Earlier Wednesday, Japan’s Nikkei Stock Average edged down 0.1 per cent from a near 26-year high. Hong Kong’s Hang Seng Index shed 0.3 per cent, but shares of China Literature nearly doubled on their first day of trading amid the global frenzy for technology stocks.

Dow Jones