(Reuters) – Wall Street’s main indexes rose on Monday with the Nasdaq at a fresh intraday record high as investors cheered signs of progress in COVID-19 vaccine development and an upbeat start to the second-quarter earnings season by PepsiCo.
“It’s selective optimism as we enter earnings season, chasing the same stocks that have been strong and looking forward to earnings as market continues to have a narrow focus,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.
The Philadelphia SE Semiconductor index (SOX) rose 1.8%.
PepsiCo Inc (O:PEP) gained 2.2% as it benefited from a surge in at-home consumption of salty snacks such as Fritos and Cheetos during lockdowns.
Investors are bracing for what could be the sharpest drop in quarterly earnings for S&P 500 firms since the financial crisis, according to IBES Refinitiv data. Results from big banks will be in focus this week.
The April-June reports will reveal the extent of the damage wreaked by coronavirus-induced lockdowns on corporate profits. With a record jump in cases in the United States and some other hotspots around the world, analysts have predicted a return to S&P 500 earnings growth only by 2021. (Graphic: S&P 500 versus financials: widest gap since GFC, https://fingfx.thomsonreuters.com/gfx/mkt/jbyvrrwjave/SPX%20versus%20financials.png)
Fatality rates from the coronavirus are holding reasonably stable, allowing markets to look beyond the increase in new cases and toward continued improvement in economic data and the recovery going forward, said Michael Arone, chief investment strategist at State Street (NYSE:STT) Global Advisors in Boston.
The S&P 500 is about 5% below its own record high hit in February. At 11:15 a.m. ET, the Dow Jones Industrial Average (DJI) was up 399.92 points, or 1.53%, at 26,475.22, the S&P 500 (SPX) was up 41.46 points, or 1.30%, at 3,226.50. The Nasdaq Composite (IXIC) was up 187.18 points, or 1.76%, at 10,804.62.
Tesla Inc (O:TSLA) jumped 14.4% to $1,767.26, building on a rally of nearly 25% in the past two consecutive weeks. Over the weekend, it slashed the price for its Model Y SUV.
Advancing issues outnumbered decliners by a 1.94-to-1 ratio on the NYSE and by a 1.26-to-1 ratio on the Nasdaq.
The S&P index recorded 38 new 52-week highs and no new low, while the Nasdaq recorded 111 new highs and 12 new lows.