By Pranav Kashyap and Twesha Dikshit
(Reuters) -The S&P 500 and Dow indexes advanced on Tuesday, powered by earnings-driven rallies, while the Nasdaq lagged as mega-cap tech stocks paused after a strong run.
The results season is in full swing, with corporate giants such as General Motors, GE Aerospace, 3M and Coca-Cola reporting their numbers. But with equities hovering near record highs and valuations stretched, analysts warn that strong numbers alone may not suffice and companies need to also show margin resilience and deliver upbeat forecasts to sustain investor optimism.
“I do think we’re going to get a little bit of a pullback before the year-end rally and maybe it’ll be triggered by tech earnings, maybe something with China-Trump, maybe geopolitical,” said Thomas Hayes, chairman at Great Hill Capital LLC.
As of 11:33 a.m. ET, the S&P 500 was trading up 0.13% after recovering opening losses.
GM shares surged 15.4% after it raised full-year forecast on a brighter tariff outlook. Ford, set to report results on Thursday, cruised 4.6% higher.
GE Aerospace rose 1.9% after lifting profit forecast, while RTX jumped 8.5%. Northrop Grumman and Lockheed Martin, however, lost 0.3% and 1.6%, respectively.
Meanwhile, Warner Bros Discovery said it was considering an outright sale following interest from several potential buyers, sending the media conglomerate’s shares soaring 11.3%.
The Dow rose 0.74%, driven by a 5.7% jump in industrial heavyweight 3M. The company raised its full-year profit forecast for the second time this year.
Coca-Cola gained 3.4% after the soft drink maker beat quarterly estimates. A 2.6% gain in Amazon further boosted the index.
Philip Morris sank 6.5% after a downbeat annual forecast.
The Nasdaq slipped 0.1% as tech and chip stocks lost momentum.
Nvidia fell 0.4%, while Alphabet dropped 4%. Marvell, Broadcom and AMD lost between 1% and 2%.
Earnings from heavyweights such as Tesla, IBM, Procter & Gamble and Intel are also on deck this week. Netflix was up 0.1% ahead of its results after the bell.
Regional bank earnings are expected to offer fresh clues on the sector’s health after credit quality concerns sparked a selloff last week.
Industrial stocks added 1.1%, while the S&P Aerospace and Defense index advanced 0.8%.
TRADE, GOVERNMENT SHUTDOWN WOES LINGER
Markets are awaiting Friday’s inflation data, as delayed economic reports amid the U.S. government shutdown has limited visibility for investors and policymakers heading into the Federal Reserve’s meeting next week.
A Reuters poll showed the Fed will lower its key interest rate by 25 basis points this month and again in December.
U.S. President Donald Trump also struck a positive tone on trade, saying he expects to reach a “fair deal” with Chinese President Xi Jinping, while downplaying tensions over Taiwan.
Markets will keep an eye on Trump’s upcoming meeting with Xi on the sidelines of next week’s economic summit in South Korea.
Advancing issues outnumbered decliners by a 1.55-to-1 ratio on the NYSE and by a 1.04-to-1 ratio on the Nasdaq.
The S&P 500 posted 19 new 52-week highs and no new lows, while the Nasdaq Composite recorded 37 new highs and 45 new lows.
(Reporting by Pranav Kashyap and Twesha Dikshit in Bengaluru; Editing by Shilpi Majumdar)
