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Stocks rise after strong earnings results

Stocks rose Tuesday as a host of major companies reported quarterly results that beat Wall Street’s expectations.

The S&P 500 (^GSPC) rose 0.05%, or 1.48 points, as of market close, led by advances in the Materials and Industrials sectors.

The Dow (^DJI) advanced 0.26%, or 67.89 points, as shares of component company Johnson & Johnson (JNJ) gained following an upbeat quarterly report. Declines in shares of UnitedHealth Group, which had risen during early trading, capped gains in the index, however.

The Nasdaq (^IXIC) advanced 0.3%, or 24.21 points.

Positive earnings results delivered Tuesday morning from major financial firms, including Bank of America (BAC) and BlackRock (BLK), helped fuel investor optimism at the start of another earnings season, offsetting some concerns after Goldman Sachs (GS) and Citigroup (C) earlier in the week posted disappointing results.

Investors are broadly expecting corporate profits to come in light over last year and are monitoring earnings results to gauge the extent of the slowdown. Earnings are expected to fall 4.9%, and aggregate S&P 500 earnings per share growth is expected to decline by 2.7% year-over-year for the first quarter 2019 earnings season, Jonathan Golub, Credit Suisse chief U.S. equity strategist, wrote in a note. However, Financials are one of four sectors analysts expect to deliver positive EPS growth, along with Industrials, Health Care and REITS, he added.

Bond yields, which move inversely to prices, stabilized after several Federal Reserve officials delivered positive assessments of the domestic economy and suggested benchmark interest rates could remain on hold through part of next year.

Chicago Fed President Charles Evans told CNBC Monday he “could see” the benchmark Fed funds rate “flat and unchanged” into fall 2020 in order to help support the outlook for inflation, which has recently run persistently below the Fed’s 2% target.

Evans said he sees economic growth decelerating to around 2% this year, from 3.1% last year, but added that the U.S. labor market remains strong and that he is not worried about a recession.

Boston Fed Chairman Eric Rosengren, another voting member of this year’s Federal Open Market Committee, also pointed to lower-than-targeted inflation in a speech delivered Monday in North Carolina. However, Rosengren noted that the miss to the inflation target is “relatively modest,” and said that “in many respects the economy is doing quite well” in relation to the Fed’s dual mandate for stable prices and maximum sustainable employment.

Bond yields edged up across the curve, with the yield on the 10-year Treasury note rising 3.9 basis points to 2.592%, as of Tuesday afternoon.

STOCKS

Bank of America (BAC, +0.13%) reported quarterly earnings results that beat Wall Street’s expectations, buoyed by strong consumer loans and deposits activity. The company delivered record quarterly profit of $7.3 billion, or 70 cents per share, beating expectations for 66 cents per share. Revenue of $23.1 billion was in-line with expectations. The company’s consumer lending business – its largest segment – delivered a 25% increase in profit over last year to $3.2 billion. However, shares fell around market open as CFO Paul Donofrio said during a call with investors that net interest income is expected to decline over the rest of the year to about half of last year’s 6% growth.

New York, USA - April 7, 2018: Street view on Bank of America branch in NYC with people waiting, pedestrians crossing, crosswalk, bike, road in Manhattan

BlackRock (BLK, +3.25%) exceeded consensus expectations for quarterly profits as its assets under management grew sequentially. Earnings per share of $6.61 beat expectations for $6.13, while $3.34 billion in revenue was in-line with consensus estimates. Blackrock’s first quarter saw $65 billion in total net inflows across product types, higher than the $54.63 billion the firm brought in the year prior.

Johnson & Johnson (JNJ, +1.1%) beat consensus expectations for first-quarter earnings, after the company posted weak full-year guidance earlier this year amid ongoing lawsuits over allegations that its talc baby powder contained asbestos. First quarter adjusted earnings were $2.10 per share, higher than the $2.04 per share expected, while sales of $20.02 billion beat expectations for $19.61 billion. J&J now sees adjusted EPS in the range of $8.53 to $8.63, from between $8.50 and $8.65 previously, and full-year sales of between $80.4 billion to $81.2 billion.

UnitedHealth Group (UNH, -4.01%) exceeded Wall Street’s expectations on the top and bottom lines for the first quarter and raised its full-year forecast for 2019 as the largest insurer in the country grew its customer base. The company sees full-year adjusted earnings per share between $14.50 to $14.75, from $14.40 to $14.70 previously. First-quarter adjusted earnings of $3.73 per share beat consensus estimates by 13 cents, while first-quarter revenue of $60.3 billion was higher than the $59.76 billion expected. In the first quarter, the company added 880,000 new customers.

ECONOMY

Industrial production unexpected declined by a seasonally adjusted 0.1% in March, the Federal Reserve reported Tuesday. Consensus economists expected this measure of factory, mining and utilities output to rise 0.2% for the month. March’s results brought the index to a 0.3% decline for the first quarter of 2019. Last year, industrial production rose 2.8% in March.

Manufacturing output, which comprises the largest portion of industrial production, remained flat in March, following an upwardly revised 0.3% decline in February. Consensus economists were expecting a rebound to a 0.1% increase in manufacturing production in March.

Morning Brief

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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