The Nasdaq Composite hit a record high, and the Dow and S&P 500 brushed against recent peaks, as strong earnings underscored the health of corporate America.
Caterpillar closed up 7.9 per cent at US$104.42 (NZ$150.27) after earlier hitting a multi-year high of US$104.89 and McDonald’s jumped 5.6 per cent to US$141.70, both after beating profit estimates.
“It’s earnings coming from the Dow companies, the largest of the large, in particular Caterpillar, really driving on the theme that US corporate profitability is on track to provide some significant year-over-year earnings growth. That in and of itself is a fantastic story,” said Peter Kenny, senior market strategist at Global Markets Advisory Group in New York.
Overall profits of S&P 500 companies are estimated to have risen 11.4 per cent in the first quarter, the most since 2011, according to Thomson Reuters I/B/E/S.
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The Nasdaq hit a record level of 6036.02, breaching 6000 for the first time, powered by gains in index heavyweights Apple and Microsoft.
The index first touched the 5000 mark on March 2000 as tech stocks bubbled before tumbling nearly 80 per cent through October 2002.
The Dow Jones Industrial Average rose 232.23 points, or 1.12 per cent, to 20,996.12, the S&P 500 gained 14.46 points, or 0.61 per cent, to 2388.61 and the Nasdaq Composite added 41.67 points, or 0.7 per cent, to 6025.49.
The S&P 500 touched its day’s high after the Wall Street Journal reported US President Donald Trump’s tax proposal, expected on Wednesday, would include a slash to 15 per cent from 39.6 per cent on many owner-operated companies.
“(Treasury Secretary Steven) Mnuchin has to have a better-articulated answer to what the tax code changes are in a meaningful way,” said Kim Forrest, senior equity research analyst at Fort Pitt Capital Group in Pittsburgh.
She said cutting taxes on partnerships and owner-operated businesses would be a strong boost to investing.
Tuesday’s gains built on a day-earlier rally, which was driven by the victory of centrist candidate Emmanuel Macron in the first round of the French presidential election. Polls showed Macron, the market’s favourite, was likely to beat his far-right rival Marine Le Pen in a deciding vote on May 7.
About 7.31 billion shares changed hands in US exchanges, above the 6.4 billion daily average over the last 20 sessions.