U.S. equities and stock exchange traded funds bounced back on Tuesday as strong fourth quarter earnings numbers help draw investors.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were 0.7% higher Tuesday.
Lifting markets higher, D.R. Horton, the largest American Homebuilder, revealed earnings that topped estimates in a sign that the tighter labor market is helping consumers, Bloomberg reports. Horton’s results come amid data revealing increased home construction and greater demand as mortgage rates begin to rise with higher rates.
The materials sector also led gains in the S&P 500, with the Materials Select Sector SPDR (NYSEArca: XLB) 2.6% higher.
Nevertheless, investors are still waiting on more clarity from President Donald Trump’s economic policies.
“We are now in a phase where the policies need to come to fruition to justify the move we have seen in the post-election period,” Bill Northey, chief investment officer at Private Client Group of U.S. Bank, told Reuters. “I believe that the market’s focus has shifted a bit back to fundamentals and the fourth-quarter earnings season, which at this point has started off on a reasonably positive note.”
S&P 500 companies’ profits are expected to rise 6.6% in the latest quarter, potentially revealing the strongest growth in three years, according to Thomson Reuters. However, traders are wary of lofty prices after the so-called Trump pump pushed the benchmark toward 17.7 times forward 12-month earnings, compared to the 10-year median of 14.7.
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