U.S. stock benchmarks finished at, or near, record highs Monday, ahead of a heavy slate of earnings for the week. Investors are counting on the prospects of slowing growth to keep the Federal Reserve from tightening monetary policy by too much down the road.
How did major indexes perform?
The Dow Jones Industrial Average
finished up 64.13 points, or 0.2%, at a record 35,741.15, after establishing a new all-time intraday record at 35,787.04.
The S&P 500
closed 21.58 points, or 0.5%, higher at 4,566.48, after also establishing a fresh intraday record at 4,572.62.
The closing highs for the S&P 500 and the Dow were the first time both indexes finished at records on the same day since Aug. 16.
The Nasdaq Composite Index
finished 136.51 points, or 0.9%, higher at 15,226.71, about 1% from its closing record high of 15,374.33 put in on Sept. 7.
What drove the market
Consumer-discretionary, energy, and materials shares helped buoy the market Monday, in what is slated to be a busy week of quarterly results from American corporations.
This week’s earnings calendar features more than 150 S&P 500 companies, or nearly a third of the broad-market index, including Facebook Inc.
which reported after the closing bell Monday.
“Earnings have been positive so far and there’s a chance we turn back to full rally mode now that we’ve made it through the most unfavorable part of fall,” said Phillip Toews, chief executive of Toews Asset Management. However, “one thing that could potentially set back stocks is if yields moved much higher.”
So far, strong earnings are helping to keep the market’s bullish uptrend intact, even as concerns about inflation persist.
The rise in stocks comes amid what investors regard as a “benign backdrop,” despite fears of a stagflationary-like environment building in the U.S., said Oliver Allen, a markets economist for London-based Capital Economics.
“While doubts have grown surrounding the strength of the U.S. economic recovery, the very low level of inflation-adjusted yields suggests that investors do not expect the Fed to be especially aggressive when it comes to raising rates,” Allen said via phone Monday.
Meanwhile, UBS Global Wealth Management is one of the firms remaining positive about equities. It points to encouraging signs from companies that’ve already reported third-quarter earnings. Some signs include strong revenue growth that is offsetting higher costs, and supply-chain disruptions which have been no worse than expected while remaining relatively concentrated in certain industries.
“Continued solid profit growth is a core pillar of our outlook for further equity market gains,” Chief Investment Officer Mark Haefele wrote in a note Monday. “We advise investors to buy winners from global growth, including energy and financials.”
Markets also will have an eye on Washington, D.C., as pivotal Democratic Sen. Joe Manchin appeared to back taxes on billionaires and certain corporations, according to the Associated Press, with the total price tag on a social services and climate change package estimated at $1.75 trillion. Manchin told reporters on Monday that he believes Democrats should be able to get a deal on a framework agreement this week, based on a report from The Hill.
Meanwhile, in public health news, Moderna Inc. MRNA said that children between the ages of 6 and 11 years old get a strong response against COVID-19, based on data from a Phase 2/3 clinical study evaluating children’s vaccine response.
Dr. Anthony Fauci, head of the National Institute of Allergy and Infectious Diseases and President Joe Biden’s chief medical adviser, said he expects children aged 5 to 11 to become eligible for vaccines by early-to-mid November. A review panel for the U.S. Food and Drug Administration found last week that the benefits of the shots outweigh risks, and an advisory committee will convene Tuesday to discuss the matter. If they vote in favor and the CDC grants final approval by next week, children could start getting their shots shortly after, Fauci told ABC News on Sunday.
Which companies were in focus?
Shares of Tesla Inc.
shot up toward another record Monday, after Hertz Global Holdings Inc.
announced plans to order 100,000 Tesla electric vehicles, as part of its goal to offer the largest EV rental fleet in North America. Shares closed 12.7% higher, sending Tesla above $1 trillion in market value for the first time.
Shares of Facebook Inc. finished rose 1.3% ahead of its results later Monday.
PayPal Holdings PYPL and Pinterest PINS shares were in focus after the payments firm said it wouldn’t bid for the art-sharing social network. PayPal shares closed up. 2.7%, while Pinterest shares tumbled 13% by about.
Kimberly-Clark Corp. KMB shares finished 2.2% lower after the consumer goods company reported third-quarter earnings that missed expectations and lowered its earnings guidance.
Citigroup C said Monday it would incur “significant” charges for winding down its Citibank Korea Inc. unit, and that it will likely provide more details in the next four business days. Citigroup shares closed down 0.8%.
Otis Worldwide Corp. OTIS reported Monday third-quarter profit and sales that rose above expectations, with sales growth exceeding the rise in expenses, and raised its full-year outlook. Otis shares closed down 4.4%.
Shares of Restaurant Brands International Inc. QSR were in focus after the Burger King, Popeyes and Tim Hortons restaurant chains parent beat profit expectations but came up a bit shy on revenue, as COVID-19 contributed to supply chain and labor challenges. Restaurant Brands shares closed 4.8% lower.
the sustainable lifestyle brand known for its shoes and sneakers, set terms for its initial public offering on Monday, with plans to offer 19.2 million shares priced at $12 to $14 each.
Shares of Remark Holdings Inc. MARK skyrocketed more than 45% on massive volume Monday.
How were other assets faring?
The yield on the 10-year Treasury note TMUBMUSD10Y fell 2 basis points to 1.634%. Yields and debt prices move in opposite directions.
The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, rose by about 0.2%.
The December WTI oil futures contract settled unchanged at $83.76 a barrel. Gold futures GC00 rose 0.6% to settle at $1,806.80 an ounce, with prices for the most active contract ending at their highest since Sept. 14, according to FactSet data.