NEW YORK: US stocks ended higher to kick off the trading week on Monday (July 17), buoyed by gains in financial and technology shares as investors awaited the next round of quarterly results this week as earnings season gathers speed.
The Dow Jones Industrial Average rose 76.32 points, or 0.22%, to 34,585.35, the S&P 500 gained 17.37 points, or 0.39%, to 4,522.79 and the Nasdaq Composite added 131.25 points, or 0.93%, to 14,244.95.
The S&P and Nasdaq have advanced in five of the past six sessions.
Companies scheduled to report earnings this week include Tesla and Netflix, while more big banks in the form of Bank of America, Morgan Stanley and Goldman Sachs are also on the docket to post results, following reports from peers such as JPMorgan and Citigroup last week.
Investors will be paying attention to company outlooks, with earnings for the quarter expected to decline 8.1%, according to Refinitiv data, a bigger decline than the 5.7% fall expected at the start of the month.
“Obviously, we are about to get all these (earnings) reports but it feels to me earnings are going to be good and at the end of the day, how do you value stocks – based on the earnings and dividends,” said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.
“By and large, the market in its totality continues to be reasonably priced if not kind of cheap. My bigger concern going forward is the Fed is going to start doing things it doesn’t need to do to win the inflation battle but will ultimately now really start to hurt the economy.”
Equities have rallied recently, with the S&P 500 and Nasdaq climbing to 15-month highs as economic data has pointed to a resilient economy, with inflation cooling and a solid labour market.
Markets have largely priced in a 25-basis-point rate increase by the Federal Reserve at its policy meeting next week, with expectations at 97.3%, according to CME’s FedWatch Tool.
Tesla gained 3.2% after the company said on Saturday it had built its first Cybertruck, after two years of delays.
In contrast, Ford Motor tumbled 5.94% after the automaker cut the price of its F-150 Lightning trucks, the latest salvo in a deepening price war among electric vehicle makers. Peer General Motors shed 3.13% and Rivian lost 3.34%.
Apple advanced 1.73% after Morgan Stanley raised its target price on the iPhone maker to US$220 from US$190, citing a bullish outlook on India as an emerging growth driver for the company.
Bank shares recovered from Friday's losses, with the S&P 500 bank index up 1.76% and the KBW regional bank index advancing 1.99%.
Activision Blizzard rose 3.49% after Microsoft said it has signed an agreement to keep “Call of Duty” on PlayStation following its acquisition.
In addition, Microsoft was granted a two-month pause of its appeal over Britain’s block against the deal to give the parties more time to reach an agreement.
AT&T slumped 6.69% to a 30-year low after Citi downgraded the telecom operator over risks tied to lead cables left buried in the United States. Verizon shares dropped 7.5%, hitting their lowest intraday level in nearly 13 years. – Reuters
