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U.S. Stocks Climb as Investors Focus on Earnings Season

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07/11/2018 | 02:07am CEST

By Ben St. Clair and Allison Prang

U.S. stocks rose Tuesday, notching their seventh session of gains in the past eight trading days, as investors looked ahead to what is expected to be another strong corporate-earnings season.

The Dow Jones Industrial Average climbed 143.07 points, or 0.6%, to 24919.66. The S&P 500 added 9.67 points, or 0.3%, to 2793.84 and the Nasdaq Composite rose 3 points, or less than 0.1%, to 7759.20. The blue-chip index on Monday had its best day in a month, and all three indexes have climbed in recent sessions despite uncertainty over trade threats with China.

Two sectors that have underperformed this year -- consumer staples and utilities -- were among the leaders in the S&P 500, rising 1.3% and 1%, respectively. Financials, the only sector in the red, fell 0.4%.

Many investors are looking ahead to the second-quarter earnings season, which unofficially kicks off Friday, when three of the biggest U.S. banks report results. Earnings for companies in the S&P 500 are expected to be up 20% in the second quarter from a year earlier, according to FactSet.

PepsiCo reported stronger-than-expected core earnings on Tuesday, thanks in part to its domestic snacks business. Its shares rose $5.13, or 4.8%, to $112.89, their largest percentage increase since August 2009.

"It's still too early to see where this goes, but I'm still very optimistic...We are going to be 20-plus percent earnings growth," Tom Stringfellow, chief investment officer at Frost Investment Advisors, said.

But he also noted that tariffs are still more important than earnings right now with earnings season yet to ramp up. Even so, trade concerns "don't seem to be impacting investor enthusiasm," Mr. Stringfellow said.

While "the major fears are still trade," investors aren't feeling as bad about trade friction as before because it doesn't seem to be getting worse, said Erik Davidson, chief investment officer for Wells Fargo Private Bank.

The first round of tariffs between the U.S. and China went into effect Friday , but U.S. stocks have risen since then as there haven't been signs of escalating tensions.

After the market closed Tuesday, the White House announced additional tariffs on $200 billion of imports from China.

While trade disputes on their own may not prove fatal to the global economy, the addition of tightening monetary policy from the Federal Reserve and political uncertainty in Europe make a risky situation worse, said Ronald Temple, head of U.S. equities and co-head of multiasset investing at Lazard Asset Management.

"You put enough of these factors together, and I do think you chip away at the foundations of corporation confidence and consumer confidence," Mr. Temple said.

Elsewhere, the Stoxx Europe 600 gained 0.4%. In Asia, China's Shanghai Composite Index rose 0.4%, while Japan's Nikkei Stock Average increased 0.7% and South Korea's Kospi added 0.4%.

Write to Allison Prang at allison.prang@wsj.com

Stocks mentioned in the article
ChangeLast1st jan.
CHINA-SHANGHAI COMP 2.50% 2797.49 End-of-day quote.-15.59%
DJ INDUSTRIAL 0.32% 26743.5 Delayed Quote.8.19%
KOSPI COMPOSITE INDEX 0.32% 2333.19 Real-time Quote.-5.50%
NASDAQ 100 -0.50% 7531.0719 Delayed Quote.18.33%
NASDAQ COMP. -0.51% 7986.9551 Delayed Quote.16.29%
NIKKEI 225 0.82% 23869.93 Real-time Quote.4.00%
S&P 500 -0.04% 2929.48 Real-time Quote.9.62%
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