Written by Lisa Pauline Matakkal and Purvi Agarwal
(Reuters) – Wall Street rose on Monday, with the S&P 500 and Dow Jones Industrial Average rising during the day as investors geared up for a week packed with important economic data that will test corporate earnings and the stock market's inflated valuations. The highest value was updated.
Semiconductor stocks led gains in the S&P 500 and Nasdaq, benchmark indexes rose as major banks closed at record levels on Friday as the third-quarter corporate earnings season got off to a strong start.
The semiconductor company index rose 1.5% to its highest in more than two months, led by Nvidia's 2.5% rise. Among other growth stocks, Apple and Microsoft rose 1.1% and 0.9%, respectively.
“We continue to see the economy continue to move forward, albeit slowly, and we expect third-quarter earnings to be strong and perhaps better than expected,” said Robert Pavlik, senior portfolio manager at Dakota Wealth Management. There is some optimism that it will happen.”
“People are coming back to these supercap tech stocks that were excluded because they were looking for rotational trades.”
The Dow Jones Industrial Average rose 180.04 points, or 0.42%, to 43,043.90, the S&P 500 rose 40.05 points, or 0.69%, to 5,855.08, and the Nasdaq Composite Index rose 145.85 points, or 0.80%, to 18,488.79.
But the Dow Jones Industrial Average's gains were capped by a 1.5% drop in Caterpillar after a brokerage downgrade and a 0.7% drop in Boeing after the aircraft maker posted a bigger-than-expected third-quarter loss on Friday. It was done.
Energy stocks fell 0.2% as oil prices fell. [O/R]
Expectations may have increased that stock prices will continue to perform well in 2024 against the backdrop of strong bank earnings. However, stock valuations are rising, with the S&P 500's forward P/E ratio at 21.8x, compared to the long-term average of 15.7x.
Companies may have trouble satisfying investors.
October marks two years since the end of the last bear market of 2022, and the S&P 500 index has risen more than 63% since its close on October 12, 2022.
This week, 41 companies in the S&P 500 are scheduled to report their financial results. The S&P 500 index's third-quarter earnings are estimated to have grown 4.9% year over year, according to data compiled by LSEG on Friday.
Investors will also be watching key economic indicators, particularly September retail sales, for clues about the financial health of U.S. consumers.
Meanwhile, Minneapolis Fed President Neel Kashkari said he expects interest rates to be cut slightly in the future as inflation remains near the central bank's 2% target. Federal Reserve Board Director Christopher Waller is also scheduled to speak later in the day.
Trading was somewhat slow on that day as the bond market was closed for the holiday.
Traders have dialed back their expectations for a deep rate cut, with 86.1% expecting a 25-basis point rate cut in November, according to CME Group's FedWatch tool.
U.S.-listed stocks of Chinese companies fell, with Alibaba down 1.2% and PDD Holdings down 4.6%, as investors were left to speculate on the size of the overall fiscal stimulus announced by China on Saturday.
Advancing issues outnumbered declining issues on the New York Stock Exchange by a 1.21-to-1 ratio, and on the Nasdaq by a 1.2-to-1 ratio.
The S&P 500 index recorded 73 new highs and 1 new low in 52 weeks, while the Nasdaq Composite Index recorded 123 new highs and 59 new lows.
(Reporting by Lisa Matakkal and Purvi Agarwal in Bengaluru; Editing by Pooja Desai)
