Dow ends above 26,000 for first time on earnings optimism

NEW YORK, Jan 17 (Reuters) - U.S. stocks jumped on Wednesday and the Dow closed above 26,000 for the first time as investors' expectations for higher earnings lifted stocks across sectors.

The Dow also hit an all-time high in intraday trading. It had briefly reached the 26,000 milestone on Tuesday, in its fastest 1,000-point rise to date, before dropping back below that threshold.

The S&P 500 posted a record closing high. It has gained 4.8 percent this year, posting only two sessions of losses. More than three-quarters of the 36 S&P 500 companies that have reported so far have topped earnings estimates, according to Thomson Reuters I/B/E/S.

Outlooks for future earnings are rosy as well, due to the lower corporate tax rates passed in December.

RELATED: 20 companies that create the most profit per employee

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20 companies that create the most profit per employee
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20 companies that create the most profit per employee

#20: Industrial Bank
Country: China
Profit: $8.1M
Employees: 56,236
Profit per employee: $144,141

#19: Cisco Systems
Country: U.S.
Profit: $10.7M
Employees: 73,700
Profit per employee: $145,712
#18: Microsoft
Country: U.S.
Profit: $16.8M
Employees: 114,000
Profit per employee: $147,351
#17: Commonwealth Bank of Australia
Country: Australia
Profit: $6.7M
Employees: 45,129
Profit per employee: $148,749
#16: Shanghai Pudong Development Bank
Country: China
Profit: $8M
Employees: 52,832
Profit per employee: $151,287
#15: Westpac Banking
Country: Australia
Profit: $5.5M
Employees: 35,280
Profit per employee: $155,244
#14: Tencent Holdings
Country: China
Profit: $6.2M
Employees: 38,775
Profit per employee: $159,533
#13: Qualcomm
Country: U.S.
Profit: $5.7M
Employees: 30,500
Profit per employee: $187,049
#12: SoftBank Group
Country: Japan
Profit: $13.2M
Employees: 68,402
Profit per employee: $192,442
#11: AbbVie
Country: U.S.
Profit: $6M
Employees: 30,000
Profit per employee: $198,433
#10: Goldman Sachs Group
Country: U.S.
Profit: $7.4M
Employees: 34,400
Profit per employee: $215,058
#9: Taiwan Semiconductor Manufacturing
Country: Taiwan
Profit: $10.3M
Employees: 46,968
Profit per employee: $218,951
#8: Alphabet
Country: U.S.
Profit: $19.5M
Employees: 72,053
Profit per employee: $270,329
#7: Apple
Country: U.S.
Profit: $45.7M
Employees: 116,000
Profit per employee: $393,853
#6: Amgen
Country: U.S.
Profit: $7.7M
Employees: 19,200
Profit per employee: $402,188
#5: National Grid
Country: U.K.
Profit: $10.2M
Employees: 22,132
Profit per employee: $458,639
#4: Facebook
Country: U.S.
Profit: $10.2M
Employees: 17,048
Profit per employee: $599,308
#3: Freddie Mac
Country: U.S.
Profit: $7.8M
Employees: 5,982
Profit per employee: $1,306,419
#2: Gilead Sciences
Country: U.S.
Profit: $13.5M
Employees: 9,000
Profit per employee: $1,500,111
#1: Fannie Mae
Country: U.S.
Profit: $12.3M
Employees: 7,000
Profit per employee: $1,759,000
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"With any significant policy action, there's an initial pop in the market, but then it sits and digests it," said Brad McMillan, chief investment officer of Commonwealth Financial Network in Waltham, Massachusetts.

"Now we're starting to get earnings guidance ... At that point, the market starts to incorporate it as 'Yes, this is actually happening' as opposed to 'Well, this might happen'."

The Dow Jones Industrial Average rose 322.79 points, or 1.25 percent, to 26,115.65, the S&P 500 gained 26.14 points, or 0.94 percent, to 2,802.56 and the Nasdaq Composite added 74.59 points, or 1.03 percent, to 7,298.28.

Boeing jumped 4.7 percent after the company announced a joint venture with car seating leader Adient to make aircraft seats.

IBM rose 2.9 percent after Barclays analysts upgraded the stock two notches to "overweight" and hiked its price target by $59 to $192.

Several companies, however, saw their shares trade lower after underwhelming earnings reports and forecasts.

Banks seesawed as Goldman Sachs and Bank of America reported disappointing results. The S&P 500 banks subsector fell in earlier intraday trading but ended Wednesday up 0.6 percent.

Bank of America was down 0.2 percent after a $2.9 billion one-time tax charge nearly halved its reported profit.

Goldman Sachs fell 1.9 percent after posting its first quarterly loss in six years on tax-related charges and a sharp drop in trading revenue.

Ford tumbled 7.0 percent after the automaker reported full-year profit below estimates and provided a downbeat forecast.

General Electric slipped 4.7 percent, extending losses from Tuesday, when it announced more than $11 billion in charges.

Advancing issues outnumbered declining ones on the NYSE by a 1.85-to-1 ratio; on Nasdaq, a 1.83-to-1 ratio favored advancers.

The S&P 500 posted 86 new 52-week highs and six new lows; the Nasdaq Composite recorded 107 new highs and 31 new lows.

Volume on U.S. exchanges was 7.40 billion shares, compared to the 6.31 billion average over the last 20 trading days. (Additional reporting by Sruthi Shankar in Bengaluru; Editing by Nick Zieminski and James Dalgleish)

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