From GM to Coca-Cola, big U.S. companies’ outlook hikes give upbeat picture in absence of economic data

Coca-Cola Co. posted third-quarter sales growth that beat Wall Street expectations. Photo by Nam Y. Huh/AP files

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Investors looking for some positive economic indicators in the absence of strong data or bullish commentary got what they were looking for on Tuesday with a slew of outlook hikes that augur optimism from some of the United States’ biggest transport, consumer and industrial titans.

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General Electric Co. raised its full-year forecast for a second consecutive quarter as the jet-engine manufacturer cashes in on a rebound in air-travel and rising demand for maintenance and new engines. The company, whose stock was already up 80 per cent so far this year, also bumped its adjusted revenue growth forecast to “high teens” from “mid-teens.” 3M Co., Northrop Grumman Corp. and RTX Corp. all followed suit, raising their profit guidance and citing “confidence” or similarly upbeat trends for the year ahead.

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The optimism carried over to the consumer space, with cigarette maker Philip Morris raising its profit guidance and pledging to exceed its 2024-2026 growth targets, while Coca-Cola Co. chief executive James Quincey proclaimed he was “confident we can deliver” in the year ahead, as the company posted third-quarter sales growth that beat Wall Street expectations. Shares of Coca-Cola rose as much as four per cent on Tuesday. The stock had gained almost 10 per cent this year through Monday’s close.

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Meanwhile, General Motors Co. raised its full-year outlook on a surge of pickup truck sales and fresh relief from the Trump administration’s tariffs on auto parts. GM stock is up about 19 per cent this year.

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In a letter to shareholders, chief executive Mary Barra thanked U.S. President Donald Trump for extending through 2030 a tariff discount on some imports for carmakers that produce and sell completed automobiles in the U.S. “GM is very well positioned as we invest to increase our already significant domestic sourcing and manufacturing footprint,” she said.

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Shares of the Detroit-based manufacturer, which have been trailing the S&P 500 this year, rose 10 per cent to US$63.82 as of 9:35 a.m. Tuesday in New York.

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U.S. equity futures were little changed Tuesday morning following a two-day advance of 1.6 per cent for the S&P 500 index, its best back-to-back gain since June.

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The majority of U.S. firms that have reported have beat profit estimates so far, but it is still early in the earnings season and there could be some negative surprises in the days and weeks ahead.

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The companies’ financial results — and all the confident commentary — mark a turnaround from recent quarters when CEOs pulled their year-ahead forecasts and used their conference calls to highlight uncertainty around trade, tariffs and consumer behaviour. The strategy over the past 10 months or so has been to dampen investor expectations and hope lower financial estimates would be easier to reach or beat if any of their worst-case economic scenarios — or Trump’s most drastic trade threats — came to fruition.

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Now, companies are reaping the benefits of that strategy with some stocks heading to record highs.

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“It’s not easy to short this market because it feels like this rally is never going to end,” Thomas Thornton told Bloomberg News.

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The founder of Hedge Fund Telemetry, who has a small net short position in the S&P 500 and the Nasdaq 100 index, put an even finer point on it: “It’s painful and discouraging to get your face ripped off everyday.”

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—With assistance from Kristina Peterson, David Welch, Chester Dawson, Jessica Menton and Michael P. Regan.

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