By Yasin Ebrahim
Investing.com – The S&P 500 and Dow closed at record highs Tuesday, despite losing some steam into the close as a Facebook-fueled wobble in communication services stifled upside momentum.
The S&P 500 rose 0.18% to close at a record of 4,574.79. The Dow Jones Industrial Average gained 0.04% to close at a record of 35,756.88. The Nasdaq was up 0.06%.
Facebook (NASDAQ:FB) fell about 4% after the social media giant reported mixed third-quarter results and flagged a drag on ad-revenue growth from Apple (NASDAQ:AAPL)’s privacy changes to its mobile operating system iOS.
A slew of Wall Street analysts downgraded their outlook on Facebook, with some pointing to the significant impact on margins from Facebook’s plan to increase investments.
“Given all the trends in the quarter and concerns around iOS/ATT, we believe what is flying somewhat under the radar is the significant step up in total expenses in 2022,” Wedbush said in a note as it cut its price target on Facebook to $325.00 from $350.00.
The busy week for big tech continues, with Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Twitter (NYSE:TWTR) set to report quarter results after the closing bell.
A jump in chip stocks, meanwhile, supported the broader tech sector underpinned by a rally in Nvidia (NASDAQ:NVDA) as Facebook’s plans to spend big on its metaverse division is expected to bolster demand for chips.
Industrials struggled to shake off losses as a slump in Lockheed Martin offset a climb in United Parcel Service and General Electric .
Lockheed Martin (NYSE:LMT) plunged more 11% after the defense contractor cut its guidance following a quarterly revenue miss that fell short of expectations.
United Parcel Service (NYSE:UPS) reported a beat on both the top and bottom lines and upgraded its outlook on margins as the logistics giant was able to weather the storm of inflation by hiking prices. Its shares were up about 7%.
General Electric (NYSE:GE) was up 2% after reporting better-than-expected earnings and cashflow, while revenue missed Wall Street estimates.
The latest quarterly results indicating that companies are able to raise prices to protect margins have removed doubt about the strength demand, helping investors look through supply-chain issues and increase their bullish bets on the stocks.
“Companies have cited margin issues, and supply chain disruptions … but so far management teams have been able to navigate these issues,” Aptus Capital Advisors portfolio manager David Wagner told Investing.com in an interview on Tuesday. “Investors are looking past the disruptions as temporary and instead are focused on continued strong demand.”
“Fears that factors [including supply-chain disruptions] would potentially reduce the expected 2022 S&P 500 earnings have not come to fruition and that’s why we have markets at all-time highs,” Wagner added.
In another sign pointing to the strength of the consumer, consumer confidence increased for first time since June.
The consumer confidence index rose to 113.8 in October, well above expectations for 108.0 as the “fading of Delta fears is outweighing the hit from higher energy prices,” Pantheon Macroeconomics said in a note.