The Dow Jones industrial average rose sharply on Wednesday, closing above 23,000 for the first time, after tech giant IBM reported better-than-expected quarterly results.
The 30-stock index surged 160.16 points to 23,157.60, recording intraday and closing all-time highs.
The index first broke above 23,000 on Tuesday, but closed just below the mark. The Dow traded above 23,000 just 76 days after first breaking above 22,000.
“Ultimately, this is just a psychological factor,” said Jeff Carbone, managing partner of Cornerstone Financial Partners. But “what it does is bring up the question of how much higher can we go?”
“All the economic data suggests we have more room to the upside,” he said. “I wouldn’t be surprised if we got to 24,000 by year-end,” especially if we get tax reform.”
Bank stocks also surged Wednesday, with SPDR S&P Bank exchange-traded fund (KBE) advancing 0.7 percent. Shares of Goldman Sachs and JPMorgan Chase rose 2.5 percent and 0.4 percent, respectively.
IBM posted adjusted earnings per share of $3.30 on revenue of $19.15 billion Tuesday after the close. Analysts polled by Reuters expected the company to report earnings of $3.28 per share on sales of $18.6 billion. The company’s stock surged 9 percent and recorded its biggest one-day rise since January 2009.
“IBM turned in a solid quarter last night and we continue to believe the company will emerge from this transition a much stronger IT organization. Moreover, IBM’s 4.1% dividend yield and modest valuation should attract more value investors,” Drexel Hamilton analyst Brian White said in a note Wednesday.
The IT giant also reported its 22nd consecutive quarter of declining revenue, however.
This earnings season has gotten off to a good start, with 81 percent of companies that have reported beating on the bottom line, while 73 percent have topped sales estimates, according to Thomson Reuters I/B/E/S.
“The good news is the number of companies currently beating estimates, and the margin by which they are doing so, is running above what these same 52 companies have recorded, on average, over the past three years and their top-line revenue growth has accelerated more,” said Nick Raich, CEO of The Earnings Scout, in a note.
“The bad news is the rate of 3Q 2017 vs. 3Q 2016 earnings growth has slowed from last quarter, but is still running well above trend,” Raich said.
Companies that reported Wednesday before the bell included Abbott Labs, M&T Bank and Supervalu.
Northern Trust also posted quarterly results, beating top and bottom-line estimates. The company’s stock rose 3.8 percent and was among the best performers in the S&P 500, which hit intraday and closing records.
“As long as we have a steady economy and reasonable earnings, the path of least resistance remains higher,” said Jack Ablin, chief investment officer at BMO Private Bank.
United Continental, eBay and Dow component American Express are set to report after the close Wednesday.
Equities have been on a record-setting run this year as the three major indexes have risen more than 10 percent.
“It’s clear what stocks have celebrated this year, and that is the global growth rebound and hopes for US tax cuts, along with a year of still massive QE from the ECB and BoJ. Fed rate hikes, QT and the end of ECB QE I guess will matter more next year,” said Peter Boockvar, chief market analyst at The Lindsey Group, in a note to clients.
Hopes of U.S. tax reform have received a boost lately after the House passed a $4.1 trillion budget. The Senate is expected to vote on a budget bill this week.
Treasury Secretary Steven Mnuchin told Politico the stock market will see a “significant” drop if tax reform is not passed.
“There is no question that the rally in the stock market has baked into it reasonably high expectations of us getting tax cuts and tax reform done,” Mnuchin said.
Programming Note: For more on IBM, watch CFO Martin Schroeter’s interview on “Mad Money” tonight at 6 p.m. ET.
Clarification: This story has been updated to reflect the Dow closed above 23,000 for the first time on Wednesday.