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U.S. stock indexes spent Wednesday drifting and finished with small gains. While big companies continue to report strong profit growth, investors aren’t sure how much longer it will last.
The S&P 500 index rallied 0.8 percent in the morning after fourth-quarter earnings reports from major companies including IBM, consumer products maker Proctor & Gamble and manufacturer United Technologies. Later, traders focused on some less encouraging quarterly reports and the muddled state of trade talks between the United States and China, and the S&P 500 lost 0.8 percent before it gradually turned higher.
Corporate profit growth shot higher in early 2018 after the Republican-backed corporate tax cut, but Liz Ann Sonders, chief investment strategist for Charles Schwab, said corporate profits are growing at a slower clip because of economic weakness in Europe and China and a steep decline in oil prices.
“Even if we end up with the best-case scenario on trade, it doesn’t alleviate … global growth slowing, earnings uncertainty with regard to 2019, (or) monetary policy,” she said.
Smaller companies lagged Wednesday, and most of the companies listed on the New York Stock Exchange finished with losses. Energy companies fared the worst as the price of crude oil fell for the third time in four days after a strong start to 2019.
The S&P 500 added 5.80 points, or 0.2 percent, to 2,638.70 after a 1.4 percent loss Tuesday. The Dow Jones Industrial Average climbed 171.14 points, or 0.7 percent, to 24,575.62.
The Nasdaq composite edged up 5.41 points, or 0.1 percent, to 7,025.77. The Russell 2000 index of smaller-company stocks dipped 3.20 points, or 0.2 percent, to 1,454.26.
IBM rocketed 8.5 percent to $132.89 after its fourth-quarter results surpassed Wall Street estimates. Investors were also pleased with the company’s forecasts for 2019. BMO Research