While you were sleeping: IBM rally boosts Dow to record

Trader Gordon Charlop works on the floor of the New York Stock Exchange. Photo / AP

Wall Street rose to fresh record highs, bolstered by a rally in shares of IBM after the company reported quarterly earnings and an outlook that exceeded expectations.

IBM projected fourth-quarter revenue of US$22 billion ($30.7b) to US$22.1b ($30.9b), which-if achieved- would represent as much as a 1.5 per cent gain from the same period in 2016 and would end a 22-quarter streak of shrinking sales, according to Bloomberg.

"Management is focused in the right areas, but still have some work and must demonstrate this growth is sustainable," Josh Olson, an analyst at Edward Jones, told Reuters.

In 2.15pm trading in New York, the Dow Jones Industrial Average rallied 0.7 per cent, while the Nasdaq Composite Index gained 0.2 per cent. In 2.01pm trading, the Standard & Poor's 500 Index rose 0.2 per cent.

The Dow climbed as rallies in shares of IBM and those of Goldman Sachs, recently up 9.6 per cent and 2.1 per cent respectively, outweighed declines in shares of Chevron and those of Pfizer, recently down 1.7 per cent and 0.8 per cent respectively.

The Dow rose to a record high 23,165.12, while the S&P 500 gained to a record 2,564.11 and the Nasdaq touched a record 6,635.52.

US Treasuries slid, sending yields on the 10-year note four basis points higher to 2.34 per cent, the highest in a week, according to Bloomberg.

"We continue to see solid numbers above expectations, stability in terms of economic growth and global growth," Omar Aguilar, chief investment officer for equities at Charles Schwab Investment Management, told Reuters.

US economic activity increased in September through early October, with the pace of growth split between modest and moderate, the Federal Reserve said in its Beige Book, which is based on reports from 12 regional Fed banks.

Price pressures remained modest since the previous report, the Fed noted.

It wasn't all good news however. A Commerce Department report showed housing starts fell 4.7 per cent to a seasonally adjusted annual rate of 1.127 million units in September, the lowest level in a year.

"Residential construction should be a hefty drag on third-quarter GDP growth," Michael Gregory, deputy chief economist at BMO Capital Markets in Toronto, told Reuters. "Housing activity has shifted from leading the economic expansion to now just following it, at best."

Meanwhile, shares of Chipotle declined, down 2.5 per cent at US$320.94 ($449.12) as of 2.12pm in New York. Earlier in the day the stock fell as low as US$318.74 ($446.04). Bank of America Merrill downgraded the stock to "underperform" and slashed its price target by US$105 ($146.94) to US$285 ($398.82), Reuters reported.

In Europe, the Stoxx 600 Index finished the session with a 0.3 per cent increase from the previous close. The UK's FTSE 100 Index added 0.4 per cent, as did France's CAC 40 Index and Germany's DAX Index.