U.S. equities and stock exchange traded funds surged Tuesday toward previous records, with the Nasdaq Composite crossing over the 6,000 mark for the first time, on continued political relief after the French election results, upbeat earnings reports and speculation about President Donald Trump’s corporate tax reform.
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 up 0.7% Tuesday.
Meanwhile, the PowerShares QQQ (NasdaqGM: QQQ), which tracks the widely followed NASDAQ-100, gained 0.8% and made a new record high.
Supporting the bounce in U.S. equities, corporate earnings showed sustained strength among U.S. companies. Bank of America Merrill Lync (NYSE: BAC) pointed out that share of companies beating estimates for both per-share earnings and sales rising to its highest level since 2012.
For instance, Caterpillar (NYSE: CAT) boosted its forecasts for the year. McDonalds (NYSE: MCD) reported a rise in sales.
“We’re going to continue seeing equity markets able to attract more investors because the earnings are supporting them,” Chris Gaffney, president of EverBank World Markets, told the Wall Street Journal.
The strong earnings is also attributed to the outperformance in the tech-heavy, growth-oriented companies of the Nasdaq Composite. According to FactSet analysts, tech companies in the S&P 500 are on track to post 14% growth in earnings over the first quarter year-over-year, compared to the 10% growth rate for the broader S&P 500 index.
“Tech is always going to be the group that pulls in investors chasing growth,” Robert Pavlik, chief market strategist and senior portfolio manager at Boston Private Wealth, told the Wall Street Journal.
The markets also continued their relief rally after recent opinion polls pointed to pro-EU centrist Emmanuel Macron, who won the first round of the French presidential elections, with a lead over far-right, anti-EU Marine Le Pen in the May 7 run-off.
Further bolstering the risk-on sentiment, President Donald Trump ordered the White House to draft a tax plan to slash the corporate tax rate to 15%.
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