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Stocks posted sharp gains on Tuesday, Oct. 16, getting a boost from better-than-expected earnings from investment banks Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) .
The Dow Jones Industrial Average rose 547 points, or 2.2%, to 25,798.42, the S&P 500 gained about 2.2%, and the Nasdaq jumped 2.9%. Alphabet Inc. (GOOGL) rose 2.8% and Amazon.com Inc. (AMZN) was up 3.4%.
Dow component Walmart Inc. (WMT) lowered its earnings guidance for 2019 and said comparable U.S. store sales would grow at a slower-than-expected rate as it continued to count the cost of its $16 billion acquisition of a majority stake in India's Flipkart earlier this year. Walmart shares, however, rose 2.1%.
Walmart, the world's largest retailer, said its sees GAAP earnings per share for fiscal 2019 in the range of $2.65 to $2.80, down from a previous forecast of $2.90 to $3.05, a figure that reflects a dilution of 25 cents a share from the Flipkart deal. Comparable U.S. sales, the company said, will rise between 2.5% and 3% next year, down from a previous forecast of around 3%. Online sales, which are crucial for the group's ambitions to challenge Amazon in international markets, will likely grow by 35% over its 2020 fiscal year, the company said.
Walmart Trims 2019 Earnings Guidance After $16 Billion Flipkart DealDenting sentiment somewhat were developments in Saudi Arabia linked to the disappearance of prominent journalist Jamal Khashoggi. U.S. Secretary of State Mike Pompeo arrived in Riyadh, Saudi Arabia, earlier Tuesday and will meet King Salman to discuss the Khashoggi case amid speculation that the kingdom is preparing a report that will admit the journalist's death but pin the responsibility on interrogators working at the Saudi consulate in Istanbul, where Khashoggi was last seen on Sept. 28. The Khashoggi case has cast a dark shadow over sentiment given the potential fallout between the U.S. and a critical security ally in the Gulf region.
Morgan Stanley (MS) reported third-quarter profit of $1.17 a share, handily beating analysts' expectations of $1.01. Earnings in the quarter rose 19% from a year earlier to $2.11 billion as revenue from trading stocks and bonds increased while tax cuts from the Trump administration fattened the bottom line. The stock jumped 5.8%.
Morgan Stanley Profit Surges 19% on Tax Cuts, Trading Fee IncreaseGoldman Sachs (GS) earned $6.28 a share in the third quarter, beating Wall Street forecasts of $5.38. Third-quarter revenue of $8.65 billion came in above forecasts of $8.35 billion. Net income rose 19% to $2.52 billion. Shares rose 3%.
Goldman Sachs Profit Jumps as Tax Cuts Fatten the Bottom LineUnitedHealth Group Inc. (UNH) posted third-quarter earnings of $3.41 a share vs. estimates of $3.29. Revenue was $56.6 billion, slightly higher than forecasts of $56.34 billion. The health insurer also raised its full-year earnings outlook. The stock gained 4.6% on Tuesday.
Johnson & Johnson (JNJ) reported third-quarter adjusted earnings of $2.05 a share, 2 cents above analysts' estimates. Quarterly revenue of $20.3 billion topped forecasts that called for sales of $20.1 billion. The company also boosted its full-year profit guidance, thanks in part to a stronger-than-expected performance for key cancer treatments that offset fading sales for Remicade, its blockbuster arthritis drug. J&J rose 2%.
Johnson & Johnson Bumps Full-Year Earnings Guidance Higher After Solid Q3Earnings reports are expected after Tuesday's closing bell from Netflix Inc. (NFLX) and International Business Machines Corp. (IBM) .
Netflix Reports Q3 Earnings on Tuesday: 7 Key Things to Watch ForIBM Reports Earnings on Tuesday: 7 Key Things to WatchGoldman Sachs, Johnson & Johnson and UnitedHealth are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells the stocks? Learn more now.
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