U.S. stocks surge as tech leads ahead of earnings season
U.S. equities traded slightly higher Monday as Wall Street got ready for the beginning of the latest earnings season.
The Nasdaq composite gained 0.4 percent as technology stocks rose. Amazon’s stock climbed 1.9 percent as the company got set for its so-called Prime Day. Prime Day features big deals for Amazon’s Prime customers.
Shares of Tesla erased earlier losses, trying to rebound from last week’s sell-off. The stock entered a bear market last week, trading more than 20 percent below its all-time high.
The Dow Jones industrial average rose 22 points, with Apple and Goldman Sachs contributing the most gains. The Dow transports, meanwhile, hit a record intraday high.
The S&P 500 traded 0.2 percent higher, with technology and materials leading advancers.
Investors had high hopes for tech heading into the upcoming earnings season. David Kostin, chief U.S. equity strategist at Goldman Sachs, said in a note Friday: “Info Tech margins beat consensus forecasts in 1Q and we estimate full-year 2017 Info Tech margins will be stable at 19.9%.”
Tech stocks have been the best performers of 2017 thus far, with the sector rising 17 percent. But the sector has struggled over the past month, slipping 1.3 percent.
Jonathan Krinsky, chief market technician at MKM Partners, said in a note Monday investors should “buy into” tech’s recent pullback. “Unlike in the summer of 2015, thus far the percentage of S&P 500 Technology stocks above their 200 DMA remains firmly above 80%. Should this dip into the 60% area, like in July 2015, we would then be more concerned,” he said.
Earnings season will kick off on Friday when JPMorgan Chase, Citigroup and Wells Fargo all release their quarterly results. Investors also kept an eye out for earnings from large-cap technology companies.
“The overall earnings season, I think, is going to be a continuation of what we saw in the first quarter,” said Art Hogan, chief market strategist at Wunderlich Securities. Earnings for the S&P 500 grew by 15 percent.
Stocks ended last week on a high note, eking out a weekly gain following a strong U.S. employment report.
There are no major economic data due Monday. However, key inflation data — along with monthly retail sales — are due out at the end of the week. Federal Reserve Chair Janet Yellen is also scheduled to testify in front of Congress Wednesday and Thursday.
“The economic calendar goes dark until later this week. Although Janet Yellen will march up the steps of Capitol Hill on Wednesday, the Chairman will likely not add any new pieces to the current monetary policy puzzle. Hence, portfolio managers have started to shift their focus to the upcoming earnings season,” said Jeremy Klein, chief market strategist at FBN Securities, in a note Monday.
Source: CNBC
