US stocks trade mixed as investors weigh strong earnings against stimulus hold-up

Andrew Kelly/Reuters
  • US stocks traded mixed on Tuesday as investors weighed strong earnings reports and deal news against the latest delay in economic stimulus.
  • Merck,HSBC,Corning, and others beat third-quarter estimates when they reported figures Tuesday morning. The healthy readings suggest the bulk of the coronavirus’s economic fallout landed earlier in the year.
  • Advanced Micro Devices and Xilinx traded higher after the former announced it would buy the latter in a $US35 billion all-stock deal. The acquisition positions AMD to better compete with industry titan Intel, particularly in the communications technology business.
  • On Monday the S&P 500 fell the most in a month. The confluence of waning stimulus hopes and record new COVID-19 cases sparked the sell-off.
  • Watch major indexes update live here.

US equities traded mixed on Tuesday as investors assessed strong corporate earnings and blockbuster M&A news against the fading prospect of more economic stimulus.

Pharmaceutical giant Merck beat Wall Street’s expectations Tuesday morning as its Keytruda drug drove strong third-quarter sales. The company also lifted its earnings guidance for the year, signalling the worst of the coronavirus’s hit is behind the firm.

HSBC,Corning, and Banco Santander also rose on stronger-than-expected quarterly results. Microsoft will report third-quarter earnings after markets close.

Here’s where US indexes stood shortly after the 9:30 a.m. ET market open on Tuesday:

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Investors also digested a finalised deal between Advanced Micro Devices and Xilinx. AMD will buy the chipmaker in a $US35 billion all-stock deal set to close by the end of 2021. The purchase gives AMD a major leg-up in the communications technology business and should intensify its competition against lagging rival Intel. Xilinx surged on the news, while AMD gained slightly.

Tuesday’s price action comes after the S&P 500 fell the most in a month on Monday. Investors faced a double-whammy from exhausted stimulus hopes and record-high new COVID-19 case counts in the US. Industrials tumbled after China announced sanctions against Boeing,Raytheon, and Lockheed Martin for their proposed arms sales to Taiwan.

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Markets are poised to face increased volatility with just one week left before the US presidential election. While Vice President Joe Biden enjoys a healthy lead in most polls, some analysts fear a closer-than-expected race could lead to a contested election and spur fresh market chaos.

On the economic data front, US durable goods orders grew 1.9% in a preliminary September reading. Economists surveyed by Bloomberg expected orders to climb by just 0.5%. The reading adds to recent data suggesting the economic recovery is stable and may not require more stimulus to continue.

The Conference Board will publish October data for its consumer confidence index later Tuesday morning, which could further bolster investor sentiments.

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Spot gold gained, rising as much as 0.4%, to $US1,910.42 per ounce. The US dollar fell against a basket of major peers and Treasury yields slid for a third straight day.

Oil prices rebounded after tanking in Monday trading. West Texas Intermediate crude jumped as much as 1.5%, to $US39.12 per barrel. Brent crude, oil’s international standard, rose 1.4%, to $US41.04 per barrel, at intraday highs.

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