U.S. equities and stock exchange traded funds pushed higher Tuesday as the strong ongoing corporate earnings season helps support the market momentum.
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 0.2% higher Tuesday.
With over half of S&P 500 companies having already reported earnings for the second quarters, firms were on pace to post their best sales growth in years, the Wall Street Journal reports.
“Equities are in an earnings-driven market, surprising to the upside,” Terry Sandven, chief equity strategist at U.S. Bank Wealth Management, told the WSJ.
Many traders are also waiting for the quarterly results of Apple (NasdaqGS: AAPL), which is scheduled to reveal its second quarter earnings after the closing bell. Apple and the broader tech segment have been among the best performers this year, despite valuation concerns and bouts of volatility.
“While valuations overall and for the tech sector isn’t cheap, some of the most powerful earnings growth has come from large-cap technology names,” Bill Northey, chief investment officer at U.S. Bank Wealth Management, told Reuters.
Market participants have been closely watching the earnings season to justify the high valuations in equities. The S&P 500 is currently trading at around 18 times earnings estimate for the next 12 months, compared to its long-term average of 15 times.
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According to Thomson Reuters, S&P 500 companies are expected to have grown 10.8% in the second quarter.
“We are two-thirds through the earnings season and estimates are going only higher, including for the full year, which is helping support the fundamentals-driven market.” Northey added.
However, the positive market sentiment has been somewhat dampened by soft U.S. economic data Tuesday after U.S. auto makers revealed sales dropped sharply in July.
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