With earnings season beginning to kick into high gear over the next several sessions, investors took a risk-on attitude on Monday, sending stocks sharply higher. This added to an upswing that began late last week.
The Nasdaq Composite (COMP.IND) closed +2.0%, the S&P 500 (SP500) ended +1.2% and the Dow (DJI) finished +0.8%.
The Nasdaq led the other major averages higher, advancing 223.98 points to close at 11,364.41. The Dow Jones rose 254.07 points to end at 33,629.56, while the S&P 500 climbed 47.20 points to conclude trading at 4,019.81.
Ten of the 11 S&P sectors finished higher. This was led by a 2.3% jump in Info Tech. There were also better-than-1% gains in Communication Services, Consumer Discretionary, Financials and Industrials. Energy posted a fractional decline.
“Tech and growth led stocks higher again today. It’s been a bit of a role reversal this year as value takes a backseat to both megacap FAANG names and Cathie Wood-type ARKK stocks,” analyst Mike Zaccardi told Seeking Alpha. “What’s been different over the last couple of days is that yields have ticked back up modestly, but that’s caused few issues for rate-sensitive growth shares.”
Zaccardi added: “Today’s rally could just be child’s play ahead of earnings that begin to flood in from names like Microsoft and Tesla this week. Apple, Alphabet and Amazon report next week. That’s also when we’ll hear from the Fed and get the January jobs report. Buckle up.”
Stocks finished higher on Friday following several days of profit taking. The S&P 500 (SP500) ended lower for the week as a whole, giving back some of the gains recorded in the first half of January.
Concerns about the economy and the future of interest rates weighed on the major U.S. equity averages through much of last week. However, the focus will turn to corporate earnings in the near term, as the Federal Reserve has entered its blackout period headed into next week’s policy meeting.
At the same time, earnings season will pick up momentum through the rest of this week. Results are due out from such big names as Johnson & Johnson (JNJ), Microsoft (MSFT), Boeing (BA), IBM (IBM), Tesla (TSLA), Visa (V) and Chevron (CVX).
Looking to the bond market, rates pushed higher on Monday. The 10-year Treasury yield (US10Y) advanced 4 basis point to 3.52%, while the 2-year yield (US2Y) climbed 5 basis points to 4.24%.
Among active stocks, enterprise software maker Salesforce (CRM) advanced amid reports that the activist investor Elliott Management has made a large investment in the company.