The major stock market indexes traded higher in the first half of Tuesday's session, led by strong small-cap price action. General Motors and Dow Jones component Coca-Cola rallied after earnings reports while 3M sold off.
The Russell-2000 small-cap index showed robust leadership, jumping 2.9%. The Nasdaq composite outperformed blue chips, adding 1.9%. The Dow Jones Industrial Average lagged other benchmarks, up 0.8%, while the S&P 500 rose 1.2%.
Volume on the NYSE and the Nasdaq fell compared to the same time on Tuesday.
Crude oil ticked higher, gaining less than 1% to $85.09 per barrel, while the 10-year Treasury note yield slumped more than 3.5% to 4.07%.
European markets were mixed after Asian weakness. German and U.K. markets sold off by less than 1% while the Paris CAC 40 rose less than 1%. U.K. markets gave up an early bounce, following Rishi Sunak's ascension to the Prime Minister post.
Stock Market Q3 Earnings Flood
General Motor rallied 3.9% after reporting a profit of $2.25 per share, beating estimates by 37 cents. Revenue met expectations, lifting 56.4% to $41.89 billion.
CEO Mary Barra cited strong demand for full-size trucks but admitted that inventory is rising, even though it remains under pre-pandemic levels.
She noted that consumers remain resilient and are paying their bills, reiterating last week's comments from JPMorgan CEO Jamie Dimon.
Coca-Cola raised Q4 growth guidance, lifting more than 1.5%. 3M fell more than 3% at the open and bounced to a 0.8% loss after missing Q3 revenue estimates and lowering full-year revenue guidance.
In other earnings reports, Halliburton rallied 3.7% after beating Q3 top and bottom-line estimates, while United Parcel Service added 2.0% despite a mixed report.
Alphabet reports after the closing bell, with analysts looking for a profit of $1.26 per share on $70.67 billion in revenue. GOOGL stock is expected to return to double-digit growth in 2023.
Microsoft's earnings report is also on tap this evening. Growth in the Azure cloud division showed signs of sputtering in the last report so all eyes will be looking at that important metric. Mr. Softee is forecast to earn $2.31 per share on $49.7 billion in Q3 revenue.
Tech Futures Fall As MSFT, GOOGL Skid On Earnings; Rally Faces Key Test
Time To Get Bullish?
The bull case is getting more attention since the stock market turned to the upside on Oct. 13. There are plenty of technical reasons for a multiweek bounce, with selling pressure washed out after the vertical decline and many indexes near long-term support levels.
Speculation is also growing that the Fed will take a less-aggressive stance after next week's meeting, perhaps ratcheting down to 50-basis point hikes instead of three-quarters point ones.
Last but not least, 2023 outlooks haven't deteriorated so far this earnings season as much as forecast.
However, it's a double-edge sword. As GM and JPMorgan CEOs noted, the American consumer remains resilient, despite higher interest rates. That could cause the Fed to worry it isn't raising rates far enough or fast enough to meet its policy objectives.
And, as Monday's The Big Picture warned, "Three follow-throughs that occurred earlier this year all failed, as they often do in bear markets." That's a good reason to remain skeptical, while starting to build prudent exposure that, for most investors, won't exceed 20% of a stock portfolio.
Stock Market: IBD 50 Movers And Shakers
IBD 50 component and Warren Buffett stock Occidental Petroleum shook off early pressure in Tuesday's stock market and is trading about a point below the 72.14 buy point.
Vertex Pharmaceuticals leapt into the 5% buy zone on Monday after mounting the 306.05 buy point. The stock is now trading at an all-time high.
Finally, Harmony Biosciences nosed above the 52.62 buy point in the first hour and pulled back. It's currently trading less than one point below the 5% buy zone.
2023 earnings for HRMY stock are forecast to grow a robust 112%.
Follow Alan Farley on Twitter at @msttrader.
