Stocks rocket higher


The Dow Jones industrial average hit a record high shortly after opening Tuesday, rising 64 points. This is mostly due to Wal-Mart’s announcement that the retailer had authorized up to $20 billion in stock buybacks over the next two years, which caused the Dow to rise by 4 percent.

The company also said it plans to add 1,000 online grocery pick-up locations at its U.S. stores in fiscal 2019.

Other news that sparked the Dow increase was pharma giant Pfizer’s announcement that it was contemplating a spin-off of its consumer healthcare business, which generates $3.4 billion in annual sales. Pfizer’s stock rose approximately 0.5 percent in response.

Honeywell also contributed to the gains when the tech leader announced its plans to split its Home Products and Transportation Systems businesses into two separate public companies by the end of next year.

The Nasdaq composite also reached an all-time high, rising 0.4 percent.

The S&P 500 gained 0.3 percent, with consumer staples rising 0.8 percent to lead the advances. The index also reached a record high.

“There’s been some pressure from Corporate America to improve performance, and I think this is a reflection of that,” observed Maris Ogg, president at Tower Bridge Advisors. “Also, bigger companies tend to be harder to manage and grow.”

S&P 500 third-quarter earnings are expected to grow 4 percent on a year-over-year basis, according to the S&P Capital IQ.

The first two quarters of the year saw huge earnings growth, with first and second-quarter profits rising 15.5 percent and 10.8 percent, respectively.

Equities have recently jumped to record highs on the back of solid economic data and renewed hopes of tax reform. However, a feud between Sen. Bob Corker (R-Tenn.) and President Donald Trump is calling into question the likelihood of a plan moving forward.

“We believe tax cuts will come, but the target of achieving this by the end of this year looks ambitious – more likely, it will be only in Q1 or Q2 [of next year] that the many differing and sometimes conflicting interests will be reconciled,” said Paul Mortimer-Lee, chief market economist at BNP Paribas, in a note to clients.

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