Wall Street rallies as S&P seen snapping earnings decline

By Yashaswini Swamynathan

(Reuters) - Wall Street rallied on Tuesday, following a slew of market-beating results from marquee companies that led to the possibility that Corporate America could snap a four-quarter streak of declining profits.

Of the 52 S&P 500 companies that have reported results to date for the third quarter, 81 percent have reported earnings that have topped analysts average estimate, according to Thomson Reuters I/B/E/S.

Now analysts estimate earnings at S&P 500 companies rose 0.2 percent in the quarter, compared with their estimate of a 0.7 percent drop at the start of the earnings season. Profits at these companies last rose in the second quarter of 2015.

 

Analysts also expect the latest third quarter will be the first since 2014 in which both earnings and revenue of S&P 500 companies increased.

"We're seeing the delta improve to the upside in this earnings season and that sets the tone for the fourth quarter performance," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

All of the 11 major S&P 500 sectors were higher, with the spotlight on the healthcare sector that rose 1.14 percent, its most in about one month.

The biggest boost was from UnitedHealth's 7.1 percent jump, its biggest in five years, after its upbeat forecast. The stock also boosted the S&P and the Dow.

Netflix was the biggest gainer on the S&P 500, rising nearly 20 percent after posting much higher-than-expected subscriber growth.

At 12:29 p.m. ET (1629 GMT), the Dow Jones Industrial Average was up 100.44 points, or 0.56 percent, at 18,186.84.

The S&P 500 was up 17.19 points, or 0.81 percent, at 2,143.69 and the Nasdaq Composite was up 63.32 points, or 1.22 percent, at 5,263.14. Both indexes were on track for their best day this month.

Goldman Sachs rose 1.8 percent after the bank's results blew past Wall Street estimates, mirroring the performance of its Wall Street peers.

Among the laggards was IBM, which fell 3.3 percent after reporting its 18th straight quarter of revenue decline.

Johnson & Johnson was down 2.5 percent, while Pfizer gained 1.1 percent on plans to ship a cheaper biosimilar to Remicade, JNJ's top selling product. The news overshadowed J&J's slight earnings beat.

Intel, scheduled to report after markets close, rose 1.3 percent on a Barclays upgrade. Yahoo, also due to report in the evening, was up 1.1 percent.

Advancing issues outnumbered decliners on the NYSE by 2,434 to 485. On the Nasdaq, 1,968 issues rose and 742 fell.

The S&P 500 index showed three new 52-week highs and one new lows, while the Nasdaq recorded 37 new highs and 44 new lows.

(Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Savio D'Souza)