A trader works on the trading floor at the New York Stock Exchange on Sept. 18, 2024.
Andrew Kelly | Reuters
The S&P 500 rose to a fresh record Monday as investors waited to assess whether the next batch of key corporate earnings can continue to power the market to new heights.
The broad market index climbed 0.8%, while the Nasdaq Composite advanced 0.9%. The Dow Jones Industrial Average lagged and rose 0.5%. The 30-stock Dow was pressured by a 2% decline in Caterpillar following a downgrade from Morgan Stanley.
On the other hand, McDonald’s and UnitedHealth Group led the Dow higher. Technology continued its upwards run and was the best performing sector in the S&P.
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 all-time highs, 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 almost 23% 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.
The bond market was closed on Monday for Columbus Day.
