Stocks closed higher Tuesday after strong financial results from Google-parent Alphabet led a wave of upbeat corporate earnings.
The Dow Jones Industrial Average rose 197.65 points to 25,241.94 with United Technologies leading the blue-chip names. The added 0.5 percent to 2,820.40 thanks to gains in materials, telecommunications and energy stocks. The Nasdaq Composite originally rose more than 1 percent to an all-time high, but failed to hold those gains and closed just below breakeven at 7,840.77.
"Despite all the noise surrounding tariffs, a flattening yield curve, and tighter monetary policy, nothing matters more for the intermediate term for equities than the ability of companies to pump out profits," said Jeremy Klein, chief market strategist at FBN Securities. "Corporate executives have done just that during the current reporting season which will make it extremely difficult for stocks to struggle especially with volatility in the midst of a disappearing act."
Alphabet shares rallied 3.9 percent to a record after the company reported stronger-than-forecast quarterly results. Wall Street's top analysts are growing more confident over the prospects for many of Alphabet’s emerging businesses including YouTube, autonomous cars and cloud computing.
“Alphabet delivered strong top line results, again proving that its increased investments are paying off,” J.P. Morgan analyst Doug Anmuth said in a note. “Investments in machine learning & AI are driving innovation throughout Alphabet’s businesses, including mobile search, cloud, Google Home, Assistant, Waymo, etc.”
Facebook — which also clinched an all-time high Tuesday — and Amazon rose 1.8 percent and 1.5 percent, respectively.
Eli Lilly also reported better-than-expected earnings. The company said it plans to file an initial public offering for its Elanco Animal Health unit as well. Shares of Eli Lilly rose 5 percent.
Biogen shares jumped more than 4 percent after reporting earnings and revenue that beat expectations. Dow component United Technologies posted stronger-than-expected earnings and raising its full-year profit guidance, pushing its stock up 3.8 percent.
The earnings season is off to a strong start, according to data compiled by FactSet. Of the 21.4 percent of S&P 500 companies that have reported, 80.6 percent have topped analyst expectations for second-quarter earnings. Meanwhile, 74.1 percent of those companies have surpassed revenue estimates.
Shares of agricultural and construction company Deere rose more than 3 percent Tuesday after CNBC reported that the Trump administration plans to offer billions of dollars in aid to farmers hit by tariffs on their goods. The move represents an emergency bailout with the goal of easing financial pain felt by farmers caused by the White House's scaling trade war in key electoral states.
The temporary aid would total $12 billion, a senior administration official told NBC News.
“My expectations for earnings were pretty high coming into this season, and so far they are coming in as strong as we and a lot of people expected,” said Randy Frederick, vice president of trading and derivatives at the Schwab Center for Financial Research. “My biggest concern is if companies start guiding down because of tariffs. That’s going to cause them to sell off.”
"Right now, it doesn’t seem like most companies are as worried about the trade war as economists,” Frederick said.
Investors have been on edge recently as the U.S. ratchets up its protectionist stance on trade. Earlier on Tuesday, President Donald Trump said in a tweet: “Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs.”
The president seemed to be in a bullish mood about American's financial situation despite concerns about tariffs: "Our Country is doing GREAT. Best financial numbers on the Planet. Great to have USA WINNING AGAIN!"
Second-quarter GDP will be released on Friday with economists polled by Reuters expecting annual growth of 3.8 percent.
Equities also got a boost after China said it would use fiscal action to support its economy. The news jolted stocks around the world. In Europe, the Stoxx 600 index rose nearly 1 percent while the Shanghai Composite jumped 1.5 percent. The possibility of further loosening in monetary conditions also pushed the offshore yuan down to a 13-month low.