US stock indexes inch further into record territory
US stock indexes inched further into record territory on Wednesday after AT&T, Boeing and others joined the parade of big companies reporting stronger profits than analysts expected.
Stocks that pay big dividends were particularly strong after the Federal Reserve paused in its slow-moving campaign to lift interest rates, as Treasury yields sank lower.
The Standard & Poor's 500 index edged up by 0.70 points, or less than 0.1%, to 2,477.83 and added a whisper to its record high set a day earlier.
The Dow Jones industrial average gained 97.58 points, or 0.5%, to 21,711.01, and the Nasdaq composite rose 10.57 points, or 0.2%, to 6,422.75. Both are at record highs.
The Russell 2000 index of smaller-company stocks dipped 8.11 points, or 0.6%, to 1,442.28, and the New York Stock Exchange was nearly evenly split between stocks that rose and fell.
While announcing its decision to hold short-term rates steady, the Federal Reserve said that it may begin paring the massive 4.5 trillion dollar balance sheet it built up following the financial crisis "relatively soon", which some analysts took to mean as September.
The Fed also said that inflation looks to remain below its target of 2% in the near term.
After the Fed's announcement, drops for Treasury yields accelerated, and the 10-year yield fell to 2.29% from 2.33% late Tuesday. The two-year yield sank to 1.35% from 1.39%.
Lower bond yields make the dividends paid by stocks more attractive, and the biggest dividend payers picked up momentum following the Fed's announcement.
Utility stocks in the S&P 500 climbed 0.9%, for example, more than doubling their gain after the Fed's decision.
The best-performing area of the market was the telecom sector, which jumped after AT&T reported stronger second-quarter earnings than Wall Street had forecast. Its stock rose 1.81 dollars, or 5%, to 38.03 dollars.
Boeing was the top-performing stock, and it had its best day in more than eight years after it raised its forecast for earnings this year and reported better-than-expected earnings for the second quarter. It jumped 20.99 dollars, or 9.9%, to 233.45 dollars.
AT&T and Boeing were only the latest companies to report healthier profits for the April-through-June quarter than analysts expected.
"We've seen some pretty strong results from important companies," said John Wilson, senior equity portfolio manager at Columbia Threadneedle.
"They're delivering very strong revenue and profit growth. That's encouraging, especially given the fact that markets have had a pretty good move."
The S&P 500 is already up nearly 11% for the year on the expectation that corporate profits will continue to rise, and the stronger profits help to validate the big gains.
Mr Wilson said he has noticed some particularly encouraging comments from companies about improvements they've seen in their European businesses.
Akamai Technologies fell to the sharpest loss in the S&P 500 despite reporting better-than-expected second-quarter results.
It gave a forecast for third-quarter revenue and other measures that were lower than analysts were expecting, and its stock dropped 7.79 dollars, or 14.6%, to 45.49 dollars.
Health care stocks moved lower as investors were disappointed with several profit reports or forecasts. Hospital operator Universal Health Services dropped 10.02 dollars, or 8.2%, to 112.88 dollars after it cut its outlook following a weak second quarter.