Dow ends above 23,000 for first time on strong IBM earnings

Agence France-Presse

Posted at Oct 19 2017 08:20 AM

Specialist trader Michael Pistillo Jr. wears a dow 23,000 hat, after the dow briefly traded above 23,000, at his post on the floor of the New York Stock Exchange (NYSE) in New York, US, October 17, 2017. Brendan McDermid, Reuters

NEW YORK - The Dow surged to a record Wednesday, easily topping 23,000 points following strong earnings from IBM that boosted confidence about the rest of the quarterly reporting season.

The Dow Jones Industrial Average jumped 0.7 percent to 23,157.60, its third straight record.

The broad-based S&P 500 rose 2,561.26, while the tech-rich Nasdaq Composite Index edged up to 6,624.22. Both the S&P 500 and Nasdaq also finished at records.

IBM shot up 8.9 percent after it reported a 4 percent drop in third-quarter earnings to $2.7 billion, but offered a more bullish outlook on revenue growth after more than 5 years of declining sales. Key businesses such as cloud computing and artificial intelligence scored higher revenues.

Canaccord Genuity now estimates that third-quarter earnings growth will come in at 4.4 percent, up from 3.5 percent at the start of the period and more upward revisions likely. 

Canaccord said it also sees a strong likelihood of additional earnings growth in 2018 due to an improving economy, a likely US tax cut and other factors.

"In our view, investors are not adjusting expectations up enough to reflect headwinds that have become tailwinds for growth," said Canaccord, which has predicted the S&P 500 would hit 2,800 in 2018.

Housing data released Wednesday showed a drop in September in housing starts and permits for new construction, due partly to US hurricanes, but also declines in regions outside the hurricane-ravaged areas.

A report from the Federal Reserve characterized growth around the US as "split between modest and moderate" and said wages remain stubbornly low despite labor shortages.

Health insurer Anthem rose 2.4 percent and CVS Health gained 2 percent after the companies unveiled plans starting in 2020 for a new pharmacy benefits program.

The venture replaces Anthem's program with Express Scripts, which Anthem accused of overbilling it by billions of dollars. Express Scripts rose 1 percent.

Dow member Chevron fell 1.8 percent following a downgrade by Societe Generale.

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