Bigger profits giving boost to stock prices, too

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 larger in the first three months of the year than analysts were expecting, including Caterpillar and McDonald's. The encouraging reports pushed U.S. indexes to their second straight day of big gains, placing them either close to or firmly in record territory.

The Standard & Poor's 500 index rose 14.46 points, or 0.6 percent, to 2,388.61. It's within a third of a percent of its all-time high, set at the start of March.

The Dow Jones industrial average gained even more due to the big jumps for Caterpillar and McDonald's, which are among the 30 stocks in the average. The Dow rose 232.23 points, or 1.1 percent, to 20,996.12.

The Nasdaq composite index rose 41.67, or 0.7 percent, to 6,025.49, its first move above 6,000 points. The Russell 2000 of smaller-company stocks was up 13.13 points, or 0.9 percent, at 1,411.08.

"Earnings have come through quite nicely so far," said Ernie Cecilia, chief investment officer at Bryn Mawr Trust. "They're beating forecasts, the numbers have been quite good and this is now the second consecutive quarter that's happened."

Caterpillar soared $7.61, or 7.9 percent, to $104.42 after reporting stronger revenue and profits for the first quarter than analysts expected. It also raised its forecast for full-year results.

And it wasn't the only big industrial company to cite signs of optimism among customers. 3M said sales improved in all its markets around the world, while reporting stronger quarterly earnings than expected.

McDonald's jumped $7.47, or 5.6 percent, to $141.70 after likewise surprising investors with better-than-expected results. New items on its menu helped it to drive sales at its U.S. restaurants.

Ryder System was among the relatively few stocks to fall on Tuesday. It lost $11, or 13.9 percent, to $68.28 after weaker-than-expected rental demand pushed it to report lower quarterly results than analysts had forecast.

Even with so many corporate earnings reports on the docket, politics is still at center stage for stocks, as well.

Global markets added to big gains made on Monday, when markets soared after results from the first round of France's presidential election raised expectations that the European Union and the euro currency will remain intact.

In Europe, France's CAC 40 rose 0.2 percent and reached its highest closing level since 2008. Germany's DAX rose 0.1 percent, and the FTSE 100 in London rose 0.2 percent. In Asia, Japan's Nikkei 225 index climbed 1.1 percent, South Korea's Kospi gained 1.1 percent and the Hang Seng in Hong Kong jumped 1.3 percent.

In the United States, one of the main reasons for the stock market's strong ascent since November is excitement about the prospect for lower taxes for businesses.

President Trump is expected to unveil details of his tax plan on Wednesday, including a cut in the corporate tax rate to 15 percent from 35 percent.

Investors, though, have grown more skeptical about the ability for Republicans in Washington to push through big change following their stumbles in overhauling the nation's health-care system. If a corporate tax cut does occur, it would likely help lift companies' profits - and stock prices - even further.

In the commodities market, the price of gold fell $10.30 to settle at $1,267.20 per ounce, silver dropped 27 cents to $17.59 per ounce and copper added 3 cents to $2.58 per pound.

Benchmark U.S. crude oil rose 33 cents to $49.56 per barrel. Brent crude, which is used to price international oils, rose 50 cents to $52.10 per barrel.

The euro rose to $1.0939 from $1.0858 late Monday. The dollar rose to 111.09 Japanese yen from 109.79, and the British pound rose to $1.2830 from $1.2789.