Stocks continue to ride strong earnings trend into record territory
NEW YORK — The stock market eked out another all-time high on Tuesday, but the gains were slight as investors awaited more news to give them an indication about the strength of the economy.
Homebuilders got a lift after D.R. Horton reported a surge in net orders for the fourth quarter, the second encouraging report from the sector in as many days after Toll Brothers reported strong revenue growth Monday. Juniper Networks slumped after the sudden departure of its CEO.
The stock market’s climb to record levels is being underpinned by record corporate earnings. As the reporting period for the third quarter winds down, companies have again managed to post strong earnings, allaying investors’ concern that slowing growth elsewhere in the world would crimp profits.
“The strengthening economy is definitely there in the earnings,” said Jerry Braakman, chief investment officer of First American Trust.
The Standard & Poor’s 500 index rose 1.42 points, or 0.1 percent, to 2,039.68. The Dow Jones industrial average climbed 1.16 points, or less than 0.1 percent, to 17,614.90. The Nasdaq composite climbed 8.94, or 0.2 percent, to 4,660.56.
Ninety percent of companies in the S&P 500 have reported their results for the third quarter. Average earnings for companies in the index are now projected to have risen 8.9 percent in the period, according to analysts at S&P Capital IQ. At the start of last month, earnings were forecast to grow only 6.7 percent.
Stocks will likely move “sideways to up” for the remainder of the year, said James Liu, Global Market Strategist at J.P. Morgan Funds. Earnings “continue to look good,” he said.
While earnings remain strong, the market could face volatility as investors fret about the potential timing of the Federal Reserve’s first increase in interest rates since 2006. “That’s my largest area of concern,” Liu said.
Fed policy makers ended their most recent bond-buying stimulus program in October and have said that they will keep interest rates low until they are more certain about the economic recovery.
On Tuesday, D.R. Horton was among the day’s gainers after the company said net orders surged 48 percent in its fourth fiscal quarter. The company’s stock climbed 52 cents, or 2.2 percent, to $23.95. Other home builders including PulteGroup and Lennar rose.
Home builders also gained Monday after luxury home builder Toll Brothers said its revenue rose 29 percent in the most recent quarter and average sales prices climbed.
Juniper Networks slumped $1.22, or 5.7 percent, to 20.28 after announcing that CEO Shaygan Kheradpir had left the company after less than a year.