By DAMIAN J. TROISE: Stocks were higher in morning trading Monday as investors geared up for the busiest week for earnings so far this season.
The S&P 500 was up 0.3% as of 11:32 a.m. Eastern. The Dow Jones Industrial Average rose 34 points, or 0.1%, to 34,078 and the Nasdaq rose 0.6%. Small company stocks outpaced the broader market in a sign that investors were feeling confident about economic growth. The Russell 2000 rose 1.2%. It will be a deluge of earnings for investors this week. Of the 500 members of the S&P 500 index, 181 will report this week. Ten of the 30 members of the Dow will also release their results. The stakes are high for investors. With millions of vaccines going out daily and trillions of dollars worth of government-led economic support being paid out, investors have turned much of their attention to how well the global economy — and corporate profits — will do in the recovery. Corporate profits in the S&P 500 are expected to be up 24% from this time a year ago, according to FactSet.
Earnings growth is being welcomed by investors who have had to justify high stock values as many companies continue to emerge from a pandemic slump. “From an absolute perspective, everybody’s expensive,” said Sam Stovall, chief investment strategist at CFRA. “Investors are basically saying we can live with that because they believe earnings are going to be even stronger than currently projected.” About a quarter of S&P 500 companies have reported quarterly results so far this earnings season. Of these, 84% have delivered earnings that topped Wall Street’s estimates, according to FactSet. Of the companies to report this week, investors will get results from Apple, Microsoft, Boeing, McDonald’s and others. Electric car maker Tesla will report its results after Monday’s closing bell.
The bond market remained relatively stable. The yield on the 10-year Treasury note rose to 1.57% from 1.56% Friday. Bond yields have remained in this narrow range for the past several days, which is a respite for investors after dealing with higher volatility in the bond market earlier this year. Investors will be looking to the Federal Reserve as the nation’s central bank holds a two-day policy meeting on Tuesday and Wednesday. Investors do not expect interest rates to change for several months, but will be looking for any guidance the Fed has to provide on their thoughts on inflation and the economic recovery. Meanwhile, the price of Bitcoin rose 8% to $53,692. The cryptocurrency had traded for as much as $63,000 as recently as last week.
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