Nasdaq crosses 6,000 as Healthy profits push stocks higher

nasdaq

NEW YORK — Profits are climbing for companies, and so are their stock prices.

More big businesses joined the earnings parade Tuesday, saying their profits were even bigger in the first three months of the year than analysts were expecting, including Caterpillar and McDonald’s. The gains put U.S. indexes on track to add to their big gains from Monday.

KEEPING SCORE: The Standard & Poor’s 500 index rose 13 points, or 0.6 percent, to 2,387 as of 10:50 a.m. Eastern time.

The Dow Jones industrial average climbed even more due to the big gains for Caterpillar and McDonald’s, which are both among the 30 stocks in the average. The Dow rose 223 points, or 1.1 percent, to 20,987.

The Nasdaq composite rose 29, or 0.5 percent, to 6,013, its first move above 6,000 points.

PROFITS PILING HIGHER: After struggling for years with a slow global economy and weak oil prices, big U.S. businesses are in the midst of reporting their best quarter of profit growth in years, analysts say.

Companies in the S&P 500 are on track to report overall growth of 10.4 percent in first-quarter earnings per share, according to S&P Global Market Intelligence. This is a particularly busy week, and more than a third of the companies in the S&P 500 are set to unveil their first-quarter results.

Many investors say the strong profit reports are necessary for them to feel comfortable with how high stock prices have become. One traditional method used to gauge whether a stock is too expensive is to compare its price to how much profit the company makes. In recent years, stock prices have climbed faster than earnings, which has led skeptics to say the market looks expensive.

CATERPILLAR CRUSHES: The machinery maker soared $6.31, or 6.5 percent, to $103.11 after reporting stronger revenue and profits for the first quarter than analysts expected. It also raised its forecast for full-year results. The big gain means its stock has recovered from losses incurred last month on worries about an Internal Revenue Service challenge of its taxes. Caterpillar has denied it broke any federal tax laws. courtesy

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