Amazon and Alphabet push S&P 500 closer to record high

By Noel Randewich and Sinead Carew

(Reuters) - The S&P 500 inched toward a record high on Tuesday, lifted by Amazon, Alphabet and Microsoft, and by a strong second-quarter earnings season that fuelled optimism about the strength in the U.S. economy.

The S&P 500 last closed at a record high on Jan. 26, and a new peak would reassure investors who have worried in recent months that almost a decade of gains on Wall Street might be ending.

A sharp rally in tech stocks has already helped Nasdaq recover much faster than the broader markets from a selloff in February, hitting a record high late last month.

 

"We might hit the record and blow through it. As long as there are still strong earnings and there are no corporate blow-ups, there's nothing that says we have to stop. Momentum can go on for a long time," said Liz Young, Senior Investment Strategist at BNY Mellon Investment Management in New York.

The financial sector <.SPSY> rose 0.77 percent as higher yields on the 10-year U.S. Treasury note > buoyed bank stocks. JPMorgan rose 0.5 percent and Bank of America added 0.3 percent.

The S&P 500 energy index <.SPNY> gained 1 percent after U.S. sanctions on Iranian goods went into effect, intensifying concerns about supply.

"Energy has been trending higher for a number of months as oil prices have climbed higher, but we're seeing a pickup in that price as sanctions on Iran become a reality," said Quincy Krosby, chief market strategist at Prudential Financial in New Jersey.

Google-parent Alphabet rose 1.8 percent and Microsoft moved up 0.7 percent, driving a 0.45 percent gain in the S&P information and technology index <.SPLRCT>.

Amazon.com added 1.1 percent. The Internet retail and infrastructure heavyweight provided the greatest lift to the S&P 500, followed by Alphabet and Microsoft.

A strong earnings season has helped U.S. stocks cushion some of the impact from the ongoing trade issues.

With second-quarter reporting season winding down, 79 percent of S&P 500 companies have topped estimates. If the beat rate holds, it will be the highest on record, dating back to the first quarter of 1994, according to Thomson Reuters I/B/E/S.

At 2:34 p.m. ET, the Dow Jones Industrial Average <.DJI> was up 0.62 percent at 25,660.45 points, while the S&P 500 <.SPX> had gained 0.38 percent to 2,861.14, just short of its January record of 2,872.87.

The Nasdaq Composite <.IXIC> added 0.34 percent to 7,886.47.

The CBOE Volatility Index <.VIX>, Wall Street's fear gauge, dropped to 10.99 points, its lowest since January.

Tesla jumped 7.4 percent after Chief Executive Elon Musk in a tweet said that he was considering taking the company private. Broadridge Financial rose 9.8 percent and Mosaic climbed 5 percent after reporting quarterly results.

Walt Disney added 1.2 percent ahead of its results after markets close.

Advancing issues outnumbered declining ones on the NYSE by a 1.29-to-1 ratio; on Nasdaq, a 1.27-to-1 ratio favored advancers.

The S&P 500 posted 30 new 52-week highs and 2 new lows; the Nasdaq Composite recorded 101 new highs and 62 new lows.

(Additional reporting by Sinead Carew and James Thorne in New York, and by Amy Caren Daniel in Bengaluru; Editing by Nick Zieminski)