- This comes as investors weigh a series of strains that led the Federal Reserve to signal a pause in its three-year hiking campaign in January.
- Trade tensions and weakening global growth have failed to upend the longest-running bull market in recent history.
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Strong quarterly financial results helped put the S&P 500 on course Tuesday to close at a record high, as ongoing trade tensions and slowing global growth failed to upend the longest-running bull market in recent history.
The index rose 0.8% to 2,931, putting it above its last closing high of 2,930.75 in September. The Dow Jones Industrial Average (+0.5%) and the Nasdaq Composite (+1.1%) were also approaching record closing levels.
Stocks were propelled by strong earnings from a wide range of companies. Twitter jumped nearly 18% after results revealed it had 134 million daily users in the first quarter, a record amount that surpassed estimates by a long shot.
Investors are also weighing a series of strains that led the Federal Reserve to signal a pause in its three-year hiking campaign in March. While officials penciled in an interest rate increase in 2020, a move in the opposite direction hasn't been ruled out .
"The Fed so far hasn't made a mistake to fuel worrisome levels of inflation or push the economy into recession by over tightening," said John Stoltzfus, the chief investment strategist at Oppenheimer Asset Management. "Essentially the Fed has been remarkably sensitive to elements of strength as well as to those of weakness in the economy in formulating policy."
Growth has been sputtering in major economies around the world, especially China and Europe. Gross domestic product in the US is expected to come in between 1% and 2% in the first quarter, and some forecasters are bracing for the possibility of a recession in the largest economy in 2020.
Investors have grown wary that technology shares, which helped lead the historic bull run that began in 2009, might fall into an underwhelming pace of growth. Those concerns have come into focus for high-flying companies including Apple, which recently warned its sales will be hurt by the slowdown.
Apparent progress in trade negotiations between the US and China have helped lift some sectors, making industrial stocks top performers in the first quarter. Chipmakers in particular have seen impressive gains, with the Philadelphia Semiconductor Index hitting an all-time high in March.
But tariffs have still cast a shadow of uncertainty over company supply chains and investment, concerns that have led some companies to dim their outlooks. The US has been embroiled in a flurry of trade disputes with its largest business partners for nine months and counting.
"Clarity on trade supports increased capital expenditures, which can extend economic and profit expansion," said John Lynch, chief investment strategist at LPL Financial. "Lower taxes, repatriation of foreign sourced profits and immediate expensing provisions are also tailwinds."
The stock market hit a major rough patch at the end of 2018, which marked its worst annual performance since the financial crisis. Yet the Dow rose to new heights more than a dozen times throughout the year, last setting a fresh record in September.
The gap between the equity risk premiums attached to stocks and relatively safe US Treasury bonds still appears to be wide, according to Vinay Pande, head of trading strategies at UBS Global Wealth Management's chief investment office.
"In the absence of a recession or recurrence of trade conflict one would expect further gains in equities, but perhaps at a more moderate pace," he said.
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