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(Bloomberg) -- Encouraging earnings reports from U.S. manufacturers pushed the Down Jones Industrial Average to a new high, while criticism of President Donald Trump from members of his own party complicated the prospects for a tax overhaul.
Caterpillar Inc. and 3M Co. delivered results that topped estimates, while General Motors Co. and Fiat Chrysler NV also rallied on earnings Tuesday. Benchmark Treasury yields broke through the key 2.4 percent level, while Bloomberg’s dollar index reached the highest point since July.
“For the most part, I think, you’ll see earnings continue to come in good -- and not just earnings, but increases in revenue that look stronger than expected,” said Gary Bradshaw, a portfolio manager at Hodges Capital Management in Dallas. “The economy is doing great here domestically, the whole world economy is certainly improving, and we’re optimistic that the market is going to continue to go higher because it is earnings-driven.”
The strong results from some of America’s biggest companies fueled speculation that growth is picking up even as Trump’s economic policies remain largely unfulfilled. An intensifying war of words between the president and Republican U.S. Senator Bob Corker of Tennessee has muddied the prospects for tax reform. In a speech highly critical of Trump, Arizona Republican Jeff Flake announced he wouldn’t seek re-election to his Senate seat, raising further uncertainty about the overhaul’s fate.
European government bond yields widened and the euro strengthened after data showed the region’s economy maintaining momentum. Japanese equities built on recent gains, with the Nikkei climbing for a record-breaking 16th consecutive session as the yen weakened. Gold fell as industrial metals advanced.
At a European Central Bank meeting Thursday, officials are expected to offer more insight into plans for tapering the QE program that runs through the end of 2017. Elsewhere, President Xi Jinping of China consolidated his power before the Communist Party’s unveiling of its top leaders on the Politburo and supreme Standing Committee on Wednesday. The composition may determine the pace of Xi’s reform plans, from deleveraging to modernizing the military. Stocks in Shanghai gained, while those in Hong Kong dropped.
Terminal users can read more in our Markets Live blog.
These are some of the key events coming up:
- The U.S. economy probably expanded at about a 2.5 percent annualized pace in the third quarter, restrained in part by the effects of two hurricanes, economists forecast the government to report on Friday.
- Australia updates on third-quarter inflation on Wednesday, while South Korea reports on GDP and Hong Kong on imports and exports. Japan reports on CPI later in the week.
- Companies reporting earnings this week include Alphabet Inc., Microsoft Corp. and Twitter Inc. in the technology sector. Ford Motor Co., Volkswagen AG and Boeing Co. headline cars and planes. Coca-Cola Co. and brewer Heineken NV join European banks including UBS Group AG, Deutsche Bank AG and Barclays Plc.
- The week also boasts rate decisions from the Bank of Canada, Norges Bank and Riksbank.
And here are the main moves in markets:
- The S&P 500 Index rose 0.16 percent in New York; the Dow jumped 0.72 percent to a record high, registering its biggest gain in six weeks.
- The Stoxx Europe 600 Index declined 0.36 percent.
- The U.K.’s FTSE 100 Index rose less than 0.05 percent.
- Germany’s DAX Index gained 0.08 percent.
- The MSCI Emerging Market Index sank 0.24 percent.
- The Bloomberg Dollar Spot Index climbed 0.3 percent to the highest in almost 15 weeks.
- The euro increased 0.1 percent to $1.1761.
- The British pound declined 0.5 percent to $1.3125.
- The yield on 10-year Treasuries climbed five basis points to 2.42 percent, the highest in about seven months.
- Germany’s 10-year yield gained four basis points to 0.48 percent.
- Britain’s 10-year yield increased four basis points to 1.357 percent.
- Gold decreased 0.4 percent to $1,276.64 an ounce, the weakest in more than two weeks.
- West Texas Intermediate crude advanced 1 percent to $52.44 a barrel, the highest in four weeks.
- LME zinc increased 1.5 percent to $3,177 per metric ton, the highest in a week.
- LME copper advanced 0.4 percent to $7,035.50 per metric ton.
- Japan’s Topix index rose 0.7 at the close in Tokyo. The Nikkei 225 added 0.5 percent. Australia’s benchmark ended fractionally higher. Hong Kong’s Hang Seng Index fell 0.5 percent and the Shanghai Composite Index added 0.2 percent. The MSCI Asia Pacific Index rose 0.1 percent.
- The Japanese yen fell 0.4 percent to 113.91 per dollar, the weakest in almost 15 weeks.
--With assistance from Adam Haigh Andreea Papuc and Samuel Potter
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