Dow Jones and S&P 500: U.S. Stocks Rise as GM and Philip Morris Lead the Rally

U.S. stock indexes rose late in Tuesday’s session, recovering from earlier weakness as rising Treasury yields impacted rate-sensitive sectors. Investors focused on corporate earnings reports to gauge the health of U.S. companies amid cautious signals from the Federal Reserve on future interest rate cuts.

At 18:32 GMT, the Dow Jones Industrial Average is trading 42987.68, up 56.08 or +0.13%. The S&P 500 Index is at 5854.33, up 0.35 or +0.01% and the Nasdaq Composite is trading 18575.85, up 35.85 or +0.19%.

The 10-year U.S. Treasury yield briefly surged above 4.2%, marking its highest point in three months before retreating. This increase followed comments from Fed officials hinting at slower future rate reductions. Despite ongoing uncertainty, traders expect an 89% chance of a quarter-point rate cut at the next Federal Reserve meeting, according to the CME’s FedWatch tool.

Rate-sensitive sectors, particularly industrials and homebuilders, saw notable declines, with stocks like Lennar and D.R. Horton dropping over 3%. The S&P 500 remains up more than 22% year-to-date, though Tuesday’s session could end a recent streak of gains.

GE Aerospace (GE.N)

GE Aerospace shares dropped 7.8% despite the company raising its profit forecast for 2024. Supply chain challenges continued to hamper the company’s revenue, disappointing investors. The broader Industrials index fell by 1.2% as GE’s struggles impacted market sentiment. Concerns linger over GE’s ability to meet demand amid ongoing logistical bottlenecks.

General Motors (GM.N)

General Motors surged nearly 9% after delivering stronger-than-expected third-quarter results. The automaker reported adjusted earnings per share (EPS) of $2.96, surpassing the $2.43 per share expected by analysts, on revenues of $48.76 billion. The company also raised its full-year guidance, fueling optimism among investors. Tuesday’s rally marked the stock’s largest one-day gain in nearly a year.

Verizon Communications (VZ.N)

Verizon saw its shares dip 4% after reporting third-quarter revenue of $33.33 billion, slightly missing expectations of $33.43 billion. However, its adjusted EPS of $1.19 beat forecasts by 1 cent. While Verizon reaffirmed its full-year outlook, the revenue shortfall raised concerns about the company’s competitive position in the telecommunications industry.

Philip Morris International (PM.N)

Philip Morris surged 8.5% after reporting third-quarter results that outperformed expectations. The company raised its profit outlook for 2024, citing strong growth in its smoke-free products segment. Investors responded positively to the upgraded guidance, reflecting confidence in the company’s transition away from traditional tobacco products.

Lockheed Martin (LMT.N)

Lockheed Martin shares fell over 5% after the company reported third-quarter revenue of $17.1 billion, missing Wall Street’s forecast of $17.35 billion. Despite the revenue miss, Lockheed raised its full-year earnings outlook and posted better-than-expected profits. However, concerns about potential cuts to defense spending weighed on the stock.

Market Forecast

As earnings season continues, market volatility is expected to persist. Rising Treasury yields, driven by uncertainty over the Federal Reserve’s interest rate policies, may continue to pressure rate-sensitive sectors like housing, technology, and industrials. Strong earnings reports from individual companies could offer temporary support to equity markets, but a cautious outlook is recommended for the short term, particularly if bond yields remain elevated or more companies report earnings misses.