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U.S. stocks nudged higher early Monday, holding levels that would secure a fifth consecutive month of gains for the S&P 500 amid optimism over corporate earnings and a resilient economy.
What’s happening
-
The Dow Jones Industrial Average
DJIA,
+0.14%
was up 15 points, or less than 0.1%, at 35,474. -
The S&P 500
SPX,
+0.08%
rose 9 points, or 0.2%, to 4,591. -
The Nasdaq Composite
COMP,
+0.07%
was up 35 points, or 0.2%, at 14,352.
The S&P 500 was up 3% in July through Friday’s close, on track for a fifth straight monthly gain, while the Dow saw a 3.1% July advance and the Nasdaq Composite gained 3.8%.
What’s driving markets
A calm start to the week leaves U.S. stocks eyeing a fifth consecutive month of gains.
The S&P 500 is up 15.4% over that period, and has advanced 19.3% for the year to date, after further indications of cooling inflation bolstered hopes the U.S. economy can avoid a sharp contraction as the end of Federal Reserve monetary tightening approaches.
Also supporting sentiment is a generally well-received second-quarter earnings season. With just over half of S&P 500 companies having reported results, 80% of them delivered a positive earnings per share surprise and 64% a positive revenue
surprise, according to FactSet.
This week brings another deluge of results, including earnings from Apple Inc.
AAPL,
and Amazon.com Inc.
AMZN,
on Thursday.
Meanwhile, rising Treasury yields, with the 10-year rate
TMUBMUSD10Y,
last week edging above the 4% threshold, are making some investors wary. Lofty stock-market valuations can make safe Treasury securities more attractive to investors.
Meanwhile, Scott Chronert, equity strategist at Citibank, raised his S&P 500 year-end target for 2023 and 2024 to 4,600 and 5,000 respectively.
“The near-term hurdles we envisioned headed into Q3 are now behind. The new targets reflect increased probability of a soft landing in our scenario approach. Related, stronger earnings growth headed into ’24 is an important call out. An index P/E above our fair value range can be attributed to the mega cap growth cohort. The implication is that we look to buy pullbacks to position for an earnings growth acceleration call in ’24,” Chronert summarized in a note to clients.
See: Citigroup raises S&P 500 target for 2023 on increased chances of ‘soft landing’
Speaking on CBS News’ “Face the Nation,” Minneapolis Fed President Neel Kashkari on Sunday said the central bank’s current assessment is that the U.S. will pull off a so-called soft landing and avoid a recession. But he noted that core inflation, currently around 4.1%, is still double the Fed’s 2% target.
“We don’t want to declare victory” yet, he said according to a transcript, adding, “If we need to raise rates further from here, we will do so.”
The Fed senior loan officer survey for the second quarter is due at 2 p.m. Eastern.
Companies in focus
-
Quest Diagnostics Inc.
DGX,
-0.67%
said Monday it has brought the first blood-based biomarker test to assess the risk of developing Alzheimer’s disease to market. Shares were off 0.7%. -
Shares of SoFi Technologies Inc.
SOFI,
+22.41%
rallied 17.7% after the financial-technology company raised its earnings outlook for the full year, while beating expectations for the latest period. -
Shares of Ford Motor Co.
F,
-0.94%
were off 1.8% Monday, after Jefferies analyst Philippe Houchois cut his rating to hold, after upgrading it to buy on May 30, citing “worse EV losses and strategic wobble.” He trimmed his stock price target to $15 from $17.
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