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S&P 500 approaching record high as stocks jump on strong earnings

Stocks rose in early trading as investors expressed optimism following strong earnings reports from UnitedHealth and Johnson & Johnson. 

The Dow rose 39 points to 26,424 in early trading, while the S&P 500 gained 6 points to 2,911, pushing the indices close to records set last year. The Dow set a record on Oct. 3 when it reached 26,828, while the S&P 500 set a record in Sept. 20 when it reached 2,931.

Investors are also keeping a close eye on trade talks between the U.S. and China, with optimism that the two countries will resolve tensions. Larry Kudlow, director of the president's National Economic Council, told reporters negotiations over complaints that China has predatory technology policies were going "very well" and making good progress.

"The air of optimism remains thick as improving risk sentiment on the back of U.S.-China trade talks has Asia markets accelerating higher today led by substantial gains on the Shanghai Composite Index," Stephen Innes of SPI Asset Management said in a commentary.

United Health

UnitedHealth Group beat first-quarter expectations and raised its 2019 forecast. The nation's largest insurer said it increased Medicare coverage and received another boost from its growing business outside health insurance.

The performance softened, at least temporarily, an unusual stock price slump so far this year.

UnitedHealth said Tuesday that revenue from its Medicare and retirement business jumped nearly 12 percent, as Medicare Advantage enrollment grew by around 400,000 people. UnitedHealth is the nation's largest provider of Medicare Advantage plans, which are privately run versions of the federally funded Medicare coverage program for people over age 65.

Overall, UnitedHealth earnings jumped 22 percent to $3.47 billion in the first quarter. Earnings, adjusted for amortization costs, were $3.73 per share, topping Wall Street estimates by 13 cents, according to a survey by Zacks Investment Research. Total revenue climbed about 9 percent to $60.31 billion, also edging out expectations.

UnitedHealth now expects 2019 adjusted earnings to range between $14.50 and $14.75 per share after reaffirming in January a forecast for $14.40 to $14.70 per share.

Johnson & Johnson

Lower sales overseas and higher costs for research and litigation pushed Johnson & Johnson's first-quarter profit down 14%, but the health care giant still beat profit and revenue expectations.

The maker of Tylenol and psoriasis drug Stelara on Tuesday said unfavorable currency exchange rates reduced revenue by nearly 4 percent, leaving total sales flat at $20.03 billion, though that edged out analysts' muted projections.

Sales of prescription medicines were the bright spot as usual, rising 4 percent and accounting for over half of the New Brunswick, New Jersey, company's total revenue.

The world's biggest maker of health care products posted net income of $3.75 billion, or $1.39 per share, down from $4.37 billion, or $1.60 per share, a year earlier.

Earnings, adjusted for litigation costs and research and development expenses, was $5.66 billion, or $2.10 per share, 7 cents better that Wall Street expected, according to a survey by Zacks Investment Research.