FILE - In this Oct. 2, 2019, file photo specialist Peter Mazza works on the floor of the New York Stock Exchange. The U.S. stock market opens at 9:30 a.m. EDT on Wednesday, Oct. 23. (AP Photo/Richard Drew, File)

US stocks tick closer to records after mixed profit reports

October 23, 2019 - 11:57 am

NEW YORK (AP) — U.S. stock indexes ticked closer to their records following a mixed set of earnings reports Wednesday, where some big companies topped Wall Street's expectations and others warned that the slowing global economy and trade tensions are hitting their profits.

The S&P 500 flipped between small gains and losses in early trading, much like it has been the past couple weeks. It's within about 1% of its record, set in July.

Overseas stock markets were mixed as the United Kingdom's pending exit from the European Union appeared set for yet another delay. Treasury yields fell and continued their nearly yearlong decline.

Health care stocks helped lead U.S. indexes higher, powered in part by Thermo Fisher Scientific, which reported stronger-than-expected profits and raised its forecast for full-year revenue and profit. Medical device company Boston Scientific also jumped to one of the biggest gains in the S&P 500 after reporting a bigger profit than expected.

Boeing climbed 2.6% after it said its 737 Max airplane may return to service by the end of the year and that it will gradually increase 737 production by late 2020. That helped make up for its weaker-than-expected profit for the latest quarter.

On the losing end was Texas Instruments, which said its customers have become far more cautious than they were even 90 days ago, with trade tensions a big factor. It reported stronger profits for the latest quarter than analysts expected, but its forecast for this quarter fell short of their estimates. It lost 6.5%.

Caterpillar, another company whose fortunes are seen on Wall Street as closely tied to President Donald Trump's trade wars, dipped 0.5% after reporting weaker-than-expected profit for the latest quarter.

Eli Lilly also dragged on the market despite reporting stronger profit than Wall Street expected. Analysts pointed to weakness in a couple key medications for the drugmaker, and its stock lost 3.5%.

KEEPING SCORE: The S&P 500 was up 5 points, or 0.2%, at 3,001 as of 11:42 a.m. Earlier in the morning, it had been down 0.2%.

The Dow Jones Industrial Average climbed 69 points, or 0.3%, to 26,857, and the Nasdaq composite added 0.2%.

EARNINGS: Roughly a quarter of companies in the S&P 500 have reported how much profit they made from July through September, and analysts are still forecasting the index will end up showing a drop in earnings per share from a year earlier.

If they're right, it would be the first time earnings have dropped for three straight quarters since 2015-16, according to FactSet.

The weakest results are expected to come from companies that are reliant on the strength of the global economy, which has been slowing amid trade wars. Raw-material producers, technology companies and energy stocks are predicted to report drops of 10% or more, according to FactSet.

But analysts are forecasting stronger growth for communications companies and businesses that sell to consumers, which have been the strongest part of the economy.

OVERSEAS: In Europe, Germany's DAX rose 0.3% while France's CAC 40 was virtually flat. London's FTSE 100 rose 0.7% after British lawmakers approved a deal for the country to leave the European Union, but rejected fast-tracking it through parliament, raising the prospect of another delay to the Oct. 31 Brexit date.

The president of the European Council, Donald Tusk, said he would recommend the other 27 nations in the trade bloc grant Britain's request for an extension to the deadline. The date could be pushed back to the end of January but the country could also face a general election in that time, raising some new uncertainties around the whole process.

In Asia, Japan's Nikkei 225 rose 0.3%, the Kospi in South Korea fell 0.4% and the Hang Seng in Hong Kong lost 0.8%.

ENERGY: Benchmark U.S. crude rose 70 cents to $55.18 per barrel. Brent crude, the international benchmark, climbed 60 cents to $60.30 per barrel.

YIELDS: The yield on the 10-year Treasury dipped to 1.75% from 1.76% late Tuesday.


AP Business Writer Joe McDonald contributed.

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