Dow Soars to All-Time High on Earnings Driven Rally

The Dow Jones Industrial Average soared to a new all-time high on Tuesday, boosted by strong quarterly results from 3M and Caterpillar. The S&P 500 Index also moved higher on the back of a rally in the financial sector, which rose to its highest level in 10 years.  The NASDAQ Composite also posted again.

In the cash market, the blue-chip Dow Jones Industrial Average settled at 23441.76, up 167.80 or +0.72%. The benchmark S&P 500 Index finished at 2569.13, up 4.15 or +0.16% and the tech-based NASDAQ Composite ended the session at 6596.88, up 10.05 or +0.15%.

Tuesday’s really was entirely earnings driven. The tone was set during the pre-market session when Caterpillar reported earnings per share of $1.95 on revenue of $11.413 billion. Analysts were looking for a profit of $1.27 per share on sales of $10.649 billion. Caterpillar stock finished 5 percent higher.

3M shares rose 5.9 percent after the company posted earnings per share of $2.33 on sales of $8.172 billion. Analysts expected a profit of $2.21 per share on revenue of $7.927 billion.

In other news, CNBC reported on Tuesday that House Republicans will unveil a tax bill on November 1. Traders are saying the prospects of getting tax reform by year’s end provide an upbeat path for the stock market bulls to continue their aggressive buying spree.

U.S. Economic News

Tuesday was another light economic news day. The Flash U.S. Composite PMI rose to 55.7 in October, hitting a nine-month high. Flash Services PMI came in at 55.9, beating the 55.2 estimate. The Richmond Fed survey of manufacturing activity showed a slowdown in manufacturing activity in October.

Forex

The U.S. Dollar Index finished lower in a lackluster trade as investors prepared for Thursday’s monetary policy decision from the European Central Bank and President Trump’s Fed Chair decision.

Traders said that Trump used a lunch with Senate Republicans on Tuesday to get their views on who he should tap to be the next leader of the Federal Reserve. A source familiar with the matte said Trump polled the Republicans on whether they would prefer Stanford University economist John Taylor or current Fed Governor Jerome Powell for the job.

According to a source who attended the lunch, more senators preferred Taylor or Powell. Trump also said he was considering reappointing the current head of the U.S. central bank, Janet Yellen.

Gold

Gold prices remained under pressure on Tuesday despite the weaker U.S. Dollar as investors reacted to the optimism in Washington over tax reform and the strong possibility that Trump may appoint a hawkish Fed Chair.

Crude Oil

U.S. West Texas Intermediate and internationally-favored Brent crude oil soared to nearly a four-week high on Tuesday after top exporter Saudi Arabia said it was determined to end a supply glut.

“We are very flexible, we are keeping our options open. We are determined to do whatever it takes to bring global inventories down to the normal level which we say is the five-year average,” Falih told Reuters.