Stock Market Today: Earnings, Fed Drive New Highs

The market tone has shifted as investors shrug off potentially concerning news, bid up stocks on less-than-stellar earnings and keep the stock market at all-time highs. The latter was achieved again in the stock market today, with the S&P 500 hitting $3,044.40.

stock market today

The only one of the three indices that hasn’t hit new highs on the latest rally is the Dow Jones Industrial Average. But given that we’re less than halfway through the busiest earnings week this quarter, that could all change. Not to mention, we have the Federal Reserve on deck Wednesday afternoon.

Earnings Roundup

Obviously the big one here is Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL). The company grew revenue 20% year-over-year to $40.5 billion and beat analysts’ estimates by $330 million. However, earnings of $10.12 per share missed expectations by $2.34.

Still, the market largely shrugged off the report. The stock initially fell more than 4% in after-hours trading, but closed lower on Tuesday by just 2.2%. Given that GOOGL hit a new all-time high on Monday, this shallow recoil isn’t too tough for bulls to absorb (so far).

Shopify (NYSE:SHOP) fell a bit harder on Tuesday, shedding roughly 3.8%. Like GOOGL, the company beat on revenue expectations as sales grew 44.6% year-over-over but missed on earnings estimates. A non-GAAP loss of 29 cents per share missed expectations by 39 cents per share, while GAAP earnings missed the mark too.

However, the e-commerce platform did provide fourth-quarter and full-year revenue expectations that came in above Street expectations. Some investors are blaming the unexpected bottom-line deficit on a one-time tax event. Whether that realization has made its way around Wall Street yet or not, this could still be investors’ way of saying SHOP stock is still too expensive at current levels.

Pfizer (NYSE:PFE) and Merck (NYSE:MRK) were both rallying on the day, climbing 2.5% and 3.5%, respectively. Both companies delivered top- and bottom-line beats, while also bumping their full-year outlook.

PFE and SHOP were two stocks in the Top Stock Trades column on Tuesday.

Fed Watch

On Wednesday, we’ll hear from the Federal Reserve after its two-day meeting. The group will notify investors about its decision regarding interest rates, followed by a Q&A session.

Last week when we looked at the Fed, the market was pricing in a 93.5% probability of a 25 basis point cut. That probability has increased slightly, now up at 97.3%. Obviously a decision to not cut rates could disrupt markets, but so far, not many are expecting that event to unfold.

If you’re tuning in, keep a listen for Fed Chair Jerome Powell’s take on whether the Fed is open to more rate cuts and how they view the repo market at this moment.

Movers in the Stock Market Today

Boeing (NYSE:BA) CEO Dennis Muilenburg testified in front on Congress Tuesday. He apologized to the families for their losses and walked Congress through various developments at the company, including the software upgrades for the 737 MAX, as well as the communication reports between Boeing and the Federal Aviation Administration. When asked if he’d retire following the 737 MAX returning to service, Muilenburg simply replied that it’s “not where his focus is right now.”

Shares of Fiat Chrysler (NYSE:FCAU) ripped 7.5% on Tuesday, on reports the company is in merger talks with Peugeot (OTCMKTS:PEUGF). Remember, Fiat Chrysler had previously discussed merging with Renault (OTCMKTS:RNSDF) earlier this year, but the plan didn’t pan out.

Reports suggest it could potentially create a $50 billion company, which would put it just shy of General Motors’ (NYSE:GM) $52.3 billion market capitalization and Tesla’s (NASDAQ:TSLA) $56.5 billion market cap. The latter sank over 3% Tuesday after it released its U.S. Securities and Exchange Commission Form 10-Q filing for its third-quarter earnings. That earnings report ignited an incredible rally in TSLA stock last week.

Bret Kenwell is the manager and author of Future Blue Chips and is on Twitter @BretKenwell. As of this writing, Bret Kenwell is long GOOGL.

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