U.S. stocks opened higher on Wednesday after easing slightly on Tuesday. In opening market trading the Dow Jones Industrial Average is higher at 18568.70. The S&P 500 Index is higher at 2166.44. The Nasdaq Composite Index is also higher at 5058.76. Stock futures for the leading indexes are also pointing higher. The Dow Futures are at 18495.0 for a gain of 15.00 points. The S&P 500 Futures are at 2160.25 for a gain of 1.50 points. The Nasdaq Futures are at 4617.75 for a gain of 11.25 points.
In the Dow Jones Industrial Average, the following stocks are leading gains for the day:
Microsoft (MSFT, Financial) 5.45%
Cisco Systems (CSCO, Financial) 1.24%
The U.S. stock market appears to be pointing higher for continued gains on Wednesday. The Dow Jones Industrial Average has reached eight consecutive days of new highs closing at 18559.01 on Tuesday. With Brexit having minimal long-term affects and the U.S. economic data trending positively, the focus has turned mostly to second quarter earnings and the earnings outlook overall. Nearing the height of the second quarter 2016 earnings season, approximately 75 publicly traded companies are reporting earnings on Wednesday.
With earnings in the spotlight, technology sector stocks have been outperforming which has been giving the market added momentum. On Monday, IBM (IBM, Financial) reported earnings results that beat both revenue and earnings expectations. Revenue for the quarter was $20.24 billion, up from $18.68 billion in the first quarter and beating analysts’ average estimate by $210 million. Earnings for the quarter were $2.95 which also beat analysts’ average estimate by 6 cents. Cloud growth continues to be the trend in the technology sector and IBM’s second quarter results have the company in a leading position. IBM’s cloud growth is being fueled by not only demand for cloud solutions but sales from cognitive solutions. In the second quarter, demand for both innovations helped the company to achieve an annual run rate increase of 50% from the comparable quarter in cloud as-a-service with revenue of $6.7 billion and a 30% increase in total cloud revenues for the quarter.
On Tuesday evening, Microsoft reported its fourth quarter and full year earnings results, also showing significant revenue growth in cloud. The company beat analysts’ average revenue estimate by $460 million with revenue of $22.6 billion. Revenue for the quarter was up 1.9% from the comparable quarter. Earnings for the quarter were $0.69, beating analysts’ average estimate by $0.11.
Microsoft’s recent acquisition of LinkedIn and Predix partnership with GE are expected to help cloud growth for the company in the near-term. Cloud was Microsoft’s strongest business segment in the fourth quarter and full year. For the quarter, intelligent cloud revenue was up 7% at $6.7 billion and for the year intelligent cloud was up 6% at $25.0 billion.
In a CNBC report following the company’s earnings results, a technology market specialist had the following insights on Microsoft’s earnings results.
Disclosure: I do not directly own any stocks included in this article.
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