The S&P 500 and Nasdaq approached record highs on Tuesday, lifted by upbeat quarterly numbers from Coca-Cola and United Technologies, along with optimism the United States would resolve its trade conflict with China.
Stocks extended gains late in the session after Bloomberg reported that U.S. Trade Representative Robert Lighthizer would travel to Shanghai next week for face-to-face trade meetings with Chinese officials.
White House economic adviser Larry Kudlow told reporters on Tuesday the in-person talks to resolve the U.S.-China trade deal were a good sign.
Corporate earnings season is off to a strong start, with nearly 80% of 104 S&P 500 companies topping earnings expectations so far in the second quarter, according to Refinitiv IBES data.
Coca-Cola rose 6.1% to a record high after the company exceeded quarterly earnings expectations and raised its full-year organic revenue forecast.
United Technologies gained 1.5% after raising its full-year profit and sales outlook.
Also helping sentiment, a deal was reached on Monday between the White House and Congress for a two-year extension of the debt limit and federal spending caps that would avert a feared government default later this year. It would, however, add to rising budget deficits.
Expectations that the Federal Reserve will cut interest rates at its policy-setting meeting next week have made investors more willing to buy stocks. The S&P 500 and Nasdaq are less than half a percent below their record high closing levels set earlier this month.
The European Central Bank is expected to signal easier monetary policy when it meets on Thursday. The International Monetary Fund lowered its forecast for global growth this year and next, warning that more U.S.-China tariffs, auto tariffs or a disorderly Brexit could slow growth further.
The Street is also anticipating quarterly reports from Facebook on Wednesday and Amazon and Alphabet on Thursday.
Overall earnings of S&P 500 companies are expected to rise about 1% in the second quarter, according to Refinitiv, improving from a small decline estimated previously.
The S&P 500 industrials index rose 1.2%, while the materials index climbed 2.0%.
Shares of Travelers fell 1.5% after the insurer’s second-quarter numbers missed estimates. It said weather-related losses led to an 18% decline in underwriting gains.
Hasbro rose 9.95% and was the largest gainer among S&P 500 companies after the toymaker reported better-than-expected quarterly revenues.
Approximately 6.0 billion shares changed hands on the major equity exchanges on Tuesday, as compared to the 6.4 billion share average over the past 20 trading days.
Existing Home Sales Lower Than Expected
Existing home sales fell more than expected in June as a persistent shortage of properties pushed prices to a record high, suggesting the housing market was struggling to regain its footing since hitting a soft patch last year.
The National Association of Realtors reported on Tuesday that existing home sales fell 1.7% to a seasonally adjusted annual rate of 5.27 million units last month. May’s sales pace was revised higher to 5.36 million units from the previously reported 5.34 million units.
Existing home sales, which make up about 90 percent of U.S. home sales, decreased 2.2% from a year ago. That was the 16th straight year-on-year decline in home sales.
The weakness in housing comes despite cheaper mortgage rates and the lowest unemployment rate in nearly 50 years.
Supply has continued to lag, especially in the lower-price segment of the housing market because of land and labor shortages, as well as expensive building materials. The government reported last week that permits for future home construction dropped to a two-year low in June.
The 30-year fixed mortgage rate has dropped to an average of 3.81% from a more than seven-year peak of 4.94% in November, according to data from mortgage finance agency Freddie Mac. Further declines are likely as the Federal Reserve is expected to cut interest rates next week for the first time in a decade.
Last month, existing home sales rose in the Northeast and Midwest. They fell in the populous South and in the West.
There were 1.93 million previously owned homes on the market in June, up from 1.91 million in May and unchanged from a year ago. The median existing house price increased 4.3% from a year ago to $285,7000 in June, an all-time high.
At June’s sales pace, it would take 4.4 months to exhaust the current inventory, up from 4.3 months in May. A six-to-seven-month supply is viewed as a healthy balance between supply and demand.