New Zealand Markets closed

S&P hits four-month high on Pepsi, oil

Amy Caren Daniel

US stocks have risen with the S&P 500 hitting a four-month high, boosted by higher oil prices and strong results from PepsiCo.

PepsiCo's shares rose 4.3 per cent after the company's quarterly revenue and profit topped analysts' estimates, helped by strong sales in its Frito-Lay unit.

"The first major earnings report came out, and PepsiCo's earnings beat expectations and that's a good start for the market," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

PepsiCo helped drive a 0.61 per cent gain in the consumer staples index. Rival Coca-Cola rose nearly 1 per cent.

The energy index was the biggest gainer among the 11 major S&P sectors, jumping 1.39 per cent as oil prices rose due to growing supply outages.

Shares of Exxon, Chevron and Schlumberger were all up about 1.5 per cent.

Overall, S&P 500 companies are expected to post second-quarter profit growth of around 21 per cent, slightly higher than what was forecast in April.

However, investors and analysts will parse quarterly reports to gauge the impact of China's tariffs, which are expected to hit a range of US companies.

On Tuesday, China raised "anti-dumping tariff rates" for some US-made optical fibre products, effective July 11.

"The trade conflict is far from over and could eventually have a very negative impact on equities, but for now it is taking a back seat only because we are entering into the earnings season," Cardillo said.

He also pointed to a "disappointing" report from the National Federation of Independent Business that showed US small business confidence index fell 0.6 points to 107.2 in June as another sign that the trade dispute is worrisome for corporate America.

Early Tuesday the S&P 500 was up 6.28 points, or 0.23 per cent, at 2,790.45. The index rose to as much as 2,791.7 points, its highest since March 13.

The Dow Jones Industrial Average was up 116.62 points, or 0.47 per cent, at 24,893.21 and the Nasdaq Composite was up 5.21 points, or 0.07 per cent, at 7,761.41.

Tesla Inc rose 1.2 per cent. The US automaker signed agreements to open a plant in Shanghai with an annual capacity of 500,000 cars, local media reported.

Shares of Walgreens Boots Alliance dropped 1.3 per cent after Evercore ISI cut its rating on the stock to "in line" from "outperform."

Rating downgrades on eBay, Chipotle Mexican Grill and Cerner also pulled shares of the three S&P 500 components down between 1.6 per cent and 3.4 per cent.

Advancing issues outnumbered decliners by a 1.44-to-1 ratio on the NYSE and by a 1.16-to-1 ratio on the Nasdaq.

The S&P index recorded 20 new 52-week highs and no new lows, while the Nasdaq recorded 60 new highs and eight new lows.