U.S. stock indexes veered mostly higher in late-afternoon trading Thursday as investors weighed a mixed batch of corporate earnings, including strong results from Facebook, Microsoft and other big companies.
The health care, communications and financial sectors helped lift the market, offsetting a sharp drop in industrial stocks after several companies delivered quarterly results that fell short of Wall Street's expectations.
Despite stock indexes' mixed trajectories, the Nasdaq was on track for its second all-time high this week. The benchmark S&P 500, meanwhile, was holding close to the record high close it set on Tuesday.
Traders have grown more optimistic that companies will continue to deliver strong growth this year, despite a slowing global economy. And many companies are delivering. Revenue jumped 14% for Microsoft and 26% for Facebook from a year ago.
Earnings reporting season is more than a third of the way in, and investors are searching for clues about whether profit growth can accelerate later this year following a weak first quarter. The stock market has had a furious rally this year, largely because the Federal Reserve has said that it is halting its plan to raise interest rates, at least temporarily.
Industrial stocks were on the losing side Thursday after 3M, the maker of Scotch tape and various products for businesses, reported lower revenue and profit for the first three months of the year than Wall Street expected. It also slashed its profit forecast for the full year. United Parcel Service said its net income fell 17% on nearly flat revenue, and Illinois Tool Works had weaker revenue than analysts forecast. Rockwell Automation said that automotive related sales were less than it expected last quarter.
They all helped drag industrial stocks to the sharpest loss by far among the 11 sectors that make up the S&P 500, and 3M's loss dealt a particularly big blow to the Dow Jones Industrial Average. 3M's stock was having its worst day since the Black Monday market collapse in October 1987.
KEEPING SCORE: The S&P 500 was up 0.2% as of 3:31 p.m. Eastern time.
The Dow Jones Industrial average fell 97 points, or 0.4%, to 26,499. Without the loss from 3M, the Dow would be up 100 points.
The Nasdaq composite rose 0.3%.
Major European indexes finished lower.
EARNINGS WINS: Facebook surged 6.2% following its earnings report. It helped lift shares of communications companies in the S&P 500, pushing the sector 1.2% higher for the biggest gain among the 11 sectors that make up the index. Comcast rose 2.8%.
Microsoft gained 3.6%, and technology stocks in the S&P 500 gained 0.1%.
EARNINGS WOES: 3M plunged 13.2% in heavy trading, UPS lost 8.2%, Illinois Tool Works fell 3.4% and Rockwell Automation sank 6.5% following their earnings reports.
Raytheon, a defense contractor that is also in the industrial sector, lost 4.6%. It reported stronger profit for the latest quarter than expected, but analysts noted some mixed results for its profit margins.
Altogether, the companies helped drag industrial stocks in the S&P 500 down by 1.9%.
GRAND PROBLEMS: Chipotle Mexican Grill fell 4.9% after it said that it received a new subpoena requesting information related to illnesses associated with restaurants in Simi Valley, California, Boston and elsewhere. It had already disclosed receiving a federal grand jury subpoena from the U.S. District Court for the central district of California in 2016. The new subpoena requests information about an additional restaurant, in Powell, Ohio. The company said it has fully cooperated in the investigation.
UP IN SMOKE: Altria Group slid 5.8% after the nation's largest cigarette maker reported weak first quarter results on lower sales and a hefty investment in cannabis company Cronos.
THE POWER OF LOW EXPECTATIONS: Coming into this earnings reporting season, Wall Street was expecting a dud. Partially because of slowing economic growth around the world, analysts were forecasting the first drop in earnings for the S&P 500 in nearly three years.
Companies, though, have been surprising analysts with not-as-bad results. So far, about 190 of the companies in the S&P 500 have reported their earnings for the first three months of the year. Among them, earnings actually grew 2.1% from a year earlier.
All the better-than-expected results mean analysts are now forecasting a drop of 2.8% in earnings for S&P 500 companies this reporting season. That's not as bad as the 4% decline they were expecting a few weeks ago.