US Stocks Near Record Highs Driven by Strong Corporate Earnings

The U.S. stock market is nearing an all-time high, with the S&P 500 climbing 0.8% on Tuesday, poised to surpass its August record. Despite concerns over war, high inflation, and rising bond market pressures, the S&P 500 has surged nearly 24% since its low in late March. The Dow Jones Industrial Average gained 343 points (0.7%), while the Nasdaq composite added 0.8%, extending its own record high from the previous day.

Challenges such as elevated oil prices and higher bond yields have intensified inflation and increased borrowing costs, yet U.S. companies continue to report strong profits. Lamb Weston, a frozen potato products seller, reported better-than-expected profits and revenue, boosting its stock by 11.9%. CEO Mike Smith acknowledged rising expenses due to inflation but raised the company’s annual profit forecast.

Analysts anticipate nearly 30% year-over-year earnings growth for S&P 500 companies, marking the third consecutive quarter of over 25% growth. Stocks received a boost as Brent crude oil prices dropped 1.1% to $99.19 per barrel, easing inflation pressures. The 10-year Treasury yield also fell slightly to 5.26%.

AI-related stocks have driven much of the market’s recent gains, with Constellation Energy surging 14% after securing a deal to supply Google with electricity. Option Care Health soared 32.9% following its acquisition by CD&R and McKesson for $5.8 billion. Globally, European and Asian markets showed mixed movements, with Japan and Hong Kong rising while South Korea’s Kospi fell 0.9%.