U.S. stocks ended higher following reports that U.S. officials will head to China for in-person meetings to discuss trade, helping equities add to gains after better-than-expected earnings results in the morning. Overseas, European stocks climbed after Boris Johnson clinched the vote to become Britain’s new prime minister.
The S&P 500 (^GSPC) rose 0.68%, or 20.44 points, as of market close. The Dow (^DJI) advanced 0.65%, or 177.29 points, as shares of Coca-Cola (KO) and United Technologies (UTX) climbed after the companies topped Wall Street’s quarterly earnings expectations. The Nasdaq (^IXIC) rose 0.58%, or 47.27 points.
U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin are set to travel to China next Monday through Wednesday to re-start in-person trade negotiations with their Chinese counterparts, an administration official confirmed to Yahoo Finance’s Jessica Smith. The Dow climbed after Bloomberg first reported the face-to-face trade talks Tuesday afternoon.
Other news out of Washington also helped support risk assets. Late Monday, President Donald Trump announced that he and congressional leaders had reached a bipartisan deal to raise the government borrowing limit and boost federal spending, in a move that helped the government avoid potentially disastrous defaults on payments in the next few months.
The plan, which outlines more than $2.7 trillion in spending over two years and suspends the debt ceiling through July 2021, was the product of weeks of negotiations between Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin. The House of Representatives must approve the agreement this week ahead of Congress’s six-week recess, while the Senate can vote on the agreement as late as next week.
Britain’s new prime minister
Overseas, European stocks advanced and the bruised British pound fluctuated after frontrunner Johnson won the election to become the U.K.’s prime minister.
Johnson, previously U.K. foreign secretary and mayor of London, defeated foreign secretary Jeremy Hunt to become the new leader of the governing Conservative Party, setting him up to succeed Theresa May as prime minister on Wednesday.
Johnson inherits a three-year long struggle to deliver an exit plan for Britain from the EU, and a deadlocked Parliament that has repeatedly struck down May’s Brexit roadmaps. Johnson, a vocal hardline Brexit proponent, has promised to pluck Britain from the EU by Oct. 31, raising the prospects of a no-deal exit that could roil businesses in the region.
The British pound initially rose against the U.S. dollar (GBPUSD=X) following the announcement of Johnson’s victory, before paring gains and dipping to below $1.25. London’s FTSE 100 index (^FTSE) rose 0.56%.
Meanwhile, global stocks were not meaningfully changed after the International Monetary Fund (IMF) cut its global growth forecast to 3.2% in 2019 and 3.5% in 2020, with both figures revised down 0.1 percentage points from the IMF’s April report. The institution cited ongoing risks stemming from U.S.-China trade tensions and Brexit uncertainties as cause for the revision, which was published Tuesday morning ET.
Second-quarter earnings season continues to chug along, with some positive reports Tuesday morning adding to investors optimism that a year-over-year decline in aggregate earnings per share among S&P 500 components may be avoided.
Coca-Cola (KO) posted quarterly comparable earnings per share (EPS) that topped consensus expectations, delivering 63 cents a share versus 61 cents a share expected. In the company’s North American market, higher drink prices for sugary beverages, along with stronger sales for healthier beverages, helped boost results. Additionally, a 7% rise in unit case volume in Asia helped drive that measure of consumer demand up 3% globally during the quarter.
Elsewhere, aerospace and defense companies United Technologies (UTX) and Lockheed Martin (LMT) each beat expectations in quarterly results and raised their full-year forecasts, underscoring ongoing strength in the aerospace market.
United Technologies, which raised its forecasts several times over the past year and recently announced a merger with Raytheon, said it expects adjusted profit to come in between $7.90 and $8.05 a share for the year, raising the low end of its guidance by 10 cents. Lockheed Martin said it expects full-year EPS will come in between $20.85 to $21.15 a share, up from the $20.05 to $20.35 range it guided toward previously, amid a bigger backlog for products including its multi-billion dollar F-35 fighter jet.
Meanwhile, PulteGroup (PHM) topped Wall Street’s expectations on the top and bottom lines in the second quarter, with the company calling attention to a strengthening housing market “following a period of softer demand in the back half of 2018,” CEO Ryan Marshall said in a statement. The company, which operates in about 50 major housing markets nationally, reported net new orders that rose 7% over last year, and a unit backlog that came in roughly flat year-over-year.
“Given the low interest rate environment, in combination with supportive economic, employment and demographic trends, we are optimistic about housing demand as we advance through the remainder of 2019,” Marshall said.
Existing-home sales declined in June
However, newly released data from the National Association of Realtors (NARs) told a different story on the housing market.
Sales of previously owned homes fell more-than-expected in June to a seasonally adjusted annual rate of 5.27 million, according to the National Association of Realtors new report released Tuesday. This was 1.7% below May’s upwardly revised level of 5.36 million, and down 2.2% over last year.
“Home sales are running at a pace similar to 2015 levels – even with exceptionally low mortgage rates, a record number of jobs and a record high net worth in the country, Lawrence Yun, NAR’s chief economist, said in a statement. “Imbalance persists for mid-to-lower priced homes with solid demand and insufficient supply, which is consequently pushing up home prices.”
Median home prices rose in every recorded region in June, NARs reported, with the largest increases tracked by the Midwest and South.
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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