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U.S. Stocks Jump On Strong Corporate Results

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04/16/2018 | 06:54 pm


By Michael Wursthorn and Georgi Kantchev



Shares of trucking companies boosted major indexes Monday, as some strong corporate-profit reports helped investors look past simmering geopolitical tensions.



Old-economy companies, such as trucking firms and rail-road operators, helped lead the S&P 500 higher after J.B. Hunt Transport Services reported stronger-than-expected revenue for the first three months of the year.



J.B. Hunt's gains spilled over to benefit other transportation companies, sending industrial firms in the S&P 500 up more than 1%. Many investors hope the latest earnings season will help steady a stock market that has stalled and stumbled over the past two months.



Analysts expect companies in the S&P 500 to grow earnings by their widest margin in six years and say the benefits of the tax overhaul passed last year and a strong economic backdrop should push profits higher. The better results should help markets "continue their longer-term trend of improving fundamentals," said Jason Pride, chief investment officer of Glenmede, which manages more than $40 billion in assets.



The Dow Jones Industrial Average gained 208 points, or 0.9%, to 24564 in recent trading. The S&P 500 added 0.8%, while the Nasdaq Composite rose 0.6%.



The Dow Jones Transportation Average, an index of 20 of the largest U.S. airlines, railroads and trucking firms, climbed 2.2%, its biggest gain in more than a month.



However, some investors worry that good earnings reports may not give stocks that big of a bounce since valuations are still relatively high, even after the recent selloff helped pull down forward-earning multiples for the S&P 500. Meanwhile, the labor market is tight, which could nudge inflation to grow more quickly than expected and resource costs could soon become problematic, said Jim Paulsen, chief investment strategist of the Leuthold Group.



Several banks on Friday saw their share prices fall after reporting strong earnings, including JPMorgan Chase, for example.



"Solid corporate performance should help buffer the stock market against a severe collapse," said Mr. Paulsen. "However, for a host of reasons, investors should probably moderate upside expectations due to robust earnings results this year."



On Monday though, investors appeared willing to temporarily put those concerns aside.



Shares of J.B. Hunt rose 6.3%, the most of any other stock in the S&P 500. Logistics firm C.H. Robinson Woldwide added 3.5%, while rail-road operators Norfolk Southern and Kansas City Southern gained 1.5% each.



Investors breathed a sigh of relief after missile strikes late Friday by the U.S., U.K. and France on Syria didn't lead to a major escalation in the seven-year-old conflict. A Pentagon official said that the single wave of strikes is complete for now, while in a Twitter post Saturday, President Donald Trump said "Mission Accomplished!"



"Uncertainties can escalate again, but so far the biggest fears haven't been realized, which allows risky assets to recover," said Viraj Patel, a strategist at ING Bank.



Elsewhere, the Stoxx Europe 600 fell 0.4%, while Asian markets ended mixed.



Asian stocks' early gains eroded Monday, led by declines in Hong Kong and mainland China over worries about the Hong Kong dollar, though Japanese stocks rose.



The Hang Seng Index ended down 1.6% while the Shanghai Composite Index of big-cap Chinese stocks was down 1.5%. Japan's Nikkei Stock Average finished up 0.3%.



Write to Michael Wursthorn at [email protected] and Georgi Kantchev at [email protected]





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