Stocks end higher as blue chips rally
NEW YORK — Stocks ended a volatile session higher on Tuesday, lifted by gains in such blue-chip names as Coca-Cola and Johnson & Johnson, though persistent weakness in momentum names limited the Nasdaq’s advance.
Coke and J&J, both Dow components, climbed after their results while recent outperformers fell, a sign that investors were rotating from growth stocks into value ones. In recent weeks, high-growth stocks have been under pressure after a meteoric rise in their prices took valuations to levels that appeared unsustainable.
The three major U.S. stock indexes fell for much of the session before rebounding in afternoon trading. The Nasdaq moved in a 108.77-point range, and at its lows of the day, it was within 0.3 percent of 3,934.53, the level that represents a 10 percent drop from its recent intraday peak, hit on March 6.
“The market is trying to stabilize, and investors are looking for high-quality names that have stability in their earnings and prices,” said Bruce McCain, chief investment strategist at Key Private Bank in Cleveland, Ohio. “This afternoon’s move is part of that same flight to quality.”
Coca-Cola Co. jumped 3.7 percent to $40.18 as one of the S&P 500’s biggest gainers after the world’s largest beverage maker reported better-than-expected quarterly revenue, helped by strong sales in China. Johnson & Johnson rose 2.1 percent to $99.20 after the pharmaceuticals and consumer products company posted earnings that beat expectations and raised its full-year profit view.
Among the most active “momentum” names, shares of electric car maker Tesla Motors Inc. fell 2.1 percent to $193.91 and shares of online movie rental company Netflix Inc. dropped 1.6 percent to $326.27. Intuitive Surgical shares fell 1.9 percent to $417.09.
“We’re going through a period of rolling corrections, which will consolidate the high-growth names that did so great last year,” said Hayes Miller, head of asset allocation in North America at Baring Asset Management in Boston. “I don’t read anything systemic into the action, as seen by the gains in more defensive areas. The losses should remain contained.”
After the closing bell, Intel Corp. shares rose 3 percent to $27.56 in extended-hours trading after the chipmaker reported its first-quarter results and gave an outlook. Yahoo Inc. shares rose 1.4 percent to $34.70 after the bell following the company’s results.
The Dow Jones industrial average rose 89.32 points, or 0.55 percent, to end at 16,262.56. The Standard & Poor’s 500 Index gained 12.37 points, or 0.68 percent, to finish at 1,842.98. The Nasdaq Composite Index added 11.47 points, or 0.29 percent, to close at 4,034.16.
In the latest economic snapshot, a gauge of manufacturing in New York state grew at a much slower rate in April than it did in March, coming in far below expectations.
The U.S. Consumer Price Index increased 0.2 percent in March as food and housing rental costs rose, although inflation pressures remained generally benign.
S&P 500 companies’ first-quarter earnings are projected to have increased just 1 percent from a year ago, Thomson Reuters data showed.