By C Nivedita
(Reuters) – The S&P 500 and Dow Jones indexes rose on Tuesday after a string of upbeat quarterly reports took the edge off a plunge in consumer confidence, with investors turning hopeful of a pickup in business activity as economies slowly reopen.
3M Co, the world’s biggest maker of N95 respirator masks, gained 4% after reporting better-than-expected quarterly profit, although it suspended its 2020 forecast due to the health crisis.
Harley-Davidson Inc jumped 9.2% as it took more steps to boost its cash reserves to deal with the drop in motorcycle sales due to lockdowns.
But declines in heavyweights Microsoft Corp and Amazon.com Inc weighed on the Nasdaq. Both companies are among a slew of tech-related firms set to report quarterly results later this week.
“This is going to be an important test for the market as lots of businesses moved online following the lockdown,” said Andrea Cicione, head of strategy at TS Lombard in London.
“If these big heavyweights in the tech space don’t deliver on the expectations, then the rally we’ve seen over the past few weeks (will) have to be questioned.”
Wall Street has recovered more than 30% from its March lows, thanks to aggressive stimulus efforts and, more recently, on signs of states moving toward partial reopening.
Still, the benchmark S&P 500 index remains 17% away from reclaiming a record high hit in February and analysts have warned of further declines if a deep global recession sets in.
Latest data showed U.S. consumer confidence tumbled in April as the lockdown measures crushed economic activity and threw millions of Americans out of work. Focus now turns to U.S. first-quarter GDP figures due Wednesday, with economists expecting a contraction of 4%.
“It’s a catch-22 sort of situation,” said Adam Vettese, analyst at investment platform eToro in London.
“The longer the lockdown, we could be in for worse economic data. That said, if we lift it too early and see a resurgence in cases, then also we are in a bad situation, which could then lead to more bad economic data.”
Investors are also awaiting the outcome of a two-day Federal Reserve policy meeting that begins later in the day, although expectations are low for more central bank easing.
The S&P 500 banks index jumped 3.4%, while financials rose 2.5%.
At 10:28 a.m. ET the Dow Jones Industrial Average was up 188.54 points, or 0.78%, at 24,322.32, the S&P 500 was up 14.94 points, or 0.52%, at 2,893.42 and the Nasdaq Composite was down 24.68 points, or 0.28%, at 8,705.48.
Healthcare stocks fell 1.6%, weighed by Merck & Co as the drugmaker warned of a $2.1 billion hit to its 2020 revenue.
Ford Motor Co and Starbucks Corp are among other big names reporting after markets close.
Advancing issues outnumbered decliners more than 4-to-1 on the NYSE and nearly matched those on the Nasdaq.
The S&P index recorded 11 new 52-week highs and one new low, while the Nasdaq recorded 44 new highs and one new low.
(Reporting by C Nivedita and Shreyashi Sanyal in Bengaluru; Editing by Sagarika Jaisinghani, Anil D’Silva and Arun Koyyur)