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Traders work on the floor at the New York Stock Exchange.
Brendan McDermid | Reuters
The S&P 500 rose to a fresh record Monday as investors waited to assess whether the next batch of key corporate earnings could power the market to more records.
The broad market index climbed 0.6%, while the Nasdaq Composite advanced 0.8%. The Dow Jones Industrial Average lagged and traded near flat. The 30-stock Dow was pressured by a 3% decline in Caterpillar following a downgrade from Morgan Stanley.
Bank of America, Goldman Sachs and Johnson & Johnson report their latest results on Tuesday, while Morgan Stanley and United Airlines are set to release results Wednesday. Walgreens Boots Alliance, Netflix and Procter & Gamble are also scheduled to post earnings this week.
Those reports will come after JPMorgan Chase and Wells Fargo kicked off the third-quarter earnings season on a high note. The early signs of a recovery in banking profits helped push the broader market to all-time highs at the end of last week. The S&P 500 closed above 5,800 for the first time on Friday, while the blue-chip Dow also reached an all-time high.
So far, 30 S&P 500 companies have posted results, beating the earnings consensus by about 5% on average, according to Bank of America. That’s better than the 3% beat at this time last quarter. Still, Bernstein believes that this quarter’s year-over-year earnings per share growth rate will still come in “much lower” than last quarter’s.
Despite the market climbing to new heights, investors remain anxious against a backdrop of a closely-contested presidential election in three weeks, suddenly rising Treasury yields, uncertainty about the pace of Federal Reserve policy easing and escalating geopolitical risks in the Middle East.
“All-time-highs sentiment is maybe a little stretched, so it wouldn’t be surprising — especially in the last three or four weeks before an election — to see some volatility return,” said Baird investment strategy analyst Ross Mayfield. “Over a three- or six-month-plus time horizon we’re still pretty bullish just on the idea of lower rates for the right reason, soft landing in the economy and earnings growth.”
The S&P 500 has gained nearly 22% this year, excluding reinvested dividends. The bull market recently turned two years old, and the benchmark has rallied nearly 63% in total since hitting a closing low in October 2022. Treasury yields have risen lately too, with the benchmark 10-year note yield, used to calculate everything from mortgages to auto loans, topping 4.1% last week.
On the data front, September retail sales and Sept. industrial production figures are out Thursday, followed by Sept. housing starts and building permits Friday.
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