The S&P 500 hovered near record levels on Tuesday as investors braced for a large amount of technical gains.
The broad stock benchmark traded near the flatline after hitting a record high in the previous session. The Dow Jones Industrial Average fell 20 points. The tech-heavy Nasdaq Composite was down 0.2%.
Tesla’s shares fell 3% even after the electric automaker posted record profits of $ 438 million. Tesla also significantly exceeded Wall Street’s earnings and earnings expectations, fueled by bitcoin sales and regulatory credit. Stocks have struggled this year, more than 18% from their record. Though the stock is still up 360% over the past 12 months.
UPS stocks rose over 10% after gains beat Wall Street estimates. The company announced that sales increased 27% in the first quarter.
The first quarter earnings season was in full swing this week. Major megacap tech companies like Alphabet, Microsoft and AMD reported after the bell on Tuesday. Apple and Facebook wins will follow after the bell on Wednesday.
“Despite the fact that expectations are high, I believe we will deliver the FANG stock and I think that this is the catalyst to continue the development of the S&P 500 to new highs,” said Jeff Kilburg , Chief Investment Officer at Sanctuary Wealth. “That’s the main focus of the week.”
So far, 84% of companies have had a positive earnings surprise, according to FactSet, as around a third of the S&P 500 have reported numbers. However, share movements were relatively subdued after the strong results as the market was at record levels with high valuations.
GameStop’s stock rose more than 6% after the video game retailer said it sold 3.5 million additional shares and raised $ 551 million to accelerate the company’s e-commerce transformation.
The S&P 500 rose to another record high on Monday, while the tech-heavy Nasdaq Composite rose 0.9% to hit its first new record high since February 12.
“Strong action suggests stocks may have even more upside,” said Jeff Buchbinder, equity strategist at LPL Financial. “Although valuations are elevated, they still seem reasonable given interest rates and inflation.”
The Federal Reserve starts its two-day session on Tuesday. The central bank is not expected to take action, but economists expect it to defend its policies to keep inflation running hot. The latest CNBC Fed poll shows that despite growing concerns about an overheated economy, the central bank will remain on hold for the remainder of 2021, keeping its asset purchase program at the same level.
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