The S&P 500 index was on track for an all-time high Tuesday as big U.S. companies began turning in solid results for the first quarter, despite predictions for the worst quarter of earnings growth in years.
The most recent record for the benchmark index was set last September, shortly before the market took a nosedive in the fourth quarter. It's since recovered all of that ground since reaching a low on Christmas Eve.
Big names including Hasbro, Lockheed Martin and Twitter all surprised Wall Street with strong profit and revenue. Analysts are watching corporate reports closely this week as they gauge whether first quarter earnings for U.S. companies will be as bad as predicted. Wall Street has been forecasting a contraction during the quarter.
The stock market has rebounded sharply this year after a steep sell-off in December that pulled the S&P 500 just 0.2% from entering a bear market, or decline of 20% from its peak.
The recovery has been fueled by investor confidence in the prospects for steady growth and an increasingly hands-off Federal Reserve, which has signaled this year that it may not raise interest rates at all in 2019 after seven increases the prior two years.
Traders have also been encouraged by improving economic data around the world. In China, economic growth held steady at 6.4% in the first quarter of the year as increased government efforts to stem a slowdown gained traction. In the U.S., job growth rebounded in March following a surprisingly weak February.
And the uncertainty over the costly trade dispute between the U.S. and China has eased in recent weeks amid signs that both sides are making progress toward reaching a resolution.
All told, the S&P 500 is up about 24.8% since it hit a bottom on Christmas Eve. Technology and industrial stocks are leading the way this year, with gains of 27.2% and 22.3%, respectively.
KEEPING SCORE: The S&P 500 index was up 0.9% as of 3:21 p.m. Eastern Time and was slightly above its all-time closing high of 2,930.75, which was set on Sept. 20. The Dow Jones Industrial Average rose 128 points, or 0.5%, to 26,639. The Nasdaq composite index climbed 1.4% and was also on track to beat the record high close of 8,109.69 it reached on Aug. 29.
Small-company stocks rose much more than the rest of the market, a bullish sign indicating that investors were more willing to take on risk. The Russell 2000 index climbed 1.6%, but was still well below the peak it reached last August, and small-company stocks are still far behind the rest of the market over the past year.
ANALYST'S TAKE: Stocks are under a little less pressure following the latest round of earnings results. That's not only because the earnings have been mostly solid, but also because companies have been issuing optimistic forecasts.
"We're getting a nice forward-looking picture from those companies," said J.J. Kinahan, chief market strategist for TD Ameritrade.
Twitter's solid report is a good sign for social media companies that have been struggling, Kinahan said. Lockheed Martin's results and forecast also bode well for other industrial companies.
STILL TO COME: Despite the strong start, there are still many big companies yet to report earnings and it's far too early to conclude that the results will beat Wall Street's modest expectations. Reports from Caterpillar, Boeing and Microsoft are all going to be closely watched Wednesday.
Broader economic issues are still hanging over U.S. companies, including the ongoing trade war between the U.S. and China and whether higher oil and gas prices raise prices for companies and consumers.
BUZZING PROFIT: Hasbro surged 13.5% after the toy company reported strong growth in its various franchises, which include Transformers toys, which benefited from the hit movie "Bumblebee" and "Magic: The Gathering Arena." The turnaround comes as Hasbro and other toy makers recover from the bankruptcy of Toys R Us.
BUBBLING SALES: Coca-Cola surprised Wall Street with its beverage sales during the first quarter after it previously warned of slower growth this year.
The stock rose 1.6% after the world's largest beverage maker reported growth in revenue and profit that beat forecasts on sales of its signature soft drink, along with sports drinks and water.
The growth warning in February triggered the stock's worst sell-off in more than a decade.
TWEET STORM: Twitter surged 15.6% after surprising Wall Street by adding more users than analysts had expected during the first quarter. All those additional thumbs texting away brought in more advertising sales and pushed revenue 18% higher.
The company beat forecasts for gains in both monthly and daily users.
There were some disappointing aspects to its quarterly report. Profit, which included a hefty tax benefit, fell short of forecasts. Looking ahead, the revenue forecast for the current quarter is mostly shy of what Wall Street expects.
LOCKHEED DELIVERS: The aerospace and defense company rose 5.8% after raising its forecast for the year on a solid outlook for jet and arms production. Profit and revenue results for the most recent quarter also beat analysts' forecasts.
The company cited its F-35 fighter jet program as a key factor in its record backlog. Missiles and sales of other arms surged during the quarter.
SOLID FOUNDATION: Homebuilder Pulte Group gained 3.4%, leading that sector higher after reporting a boost in new orders and solid earnings results. The Commerce Department also reported that new U.S. home sales increased 4.5% in March, marking the third straight monthly gain. KB Home rose 2.9%.
ENERGY BOOST: Energy companies continued riding a rising wave of oil prices, which are up 45% for the year. The latest increases are being pushed by the U.S. government's decision to further block Iranian oil exports, which could cut the global supply of oil. Concho Resources rose 1.9%.