- U.S. stocks climb
- Commodity prices jump
- Investors looking ahead to earnings season
U.S. stocks extended their recent rally Monday as investors focused on a strong jobs report from late last week and the coming earnings season, despite heightened trade tensions.
The Dow Jones Industrial Average climbed 125 points, or 0.5%, to 24581 shortly after the opening bell. The S&P 500 added 0.4%, while the tech-heavy Nasdaq Composite rose 0.6%. All three indexes were on track for a third straight session of gains.
Trading has been quiet lately, with Friday the lowest-volume day for a full session this year on exchanges owned by the New York Stock Exchange and Nasdaq.
Recent tariffs have kept investors on edge, as the U.S. and China slapped levies on $34 billion of each other’s exports on Friday. Some fear the protectionist trade policies will slow corporate activity and crimp global growth, hurting a range of assets from stocks to commodities.
Still, some analysts say they expect the countries to eventually reach a compromise on trade, instead focusing on the latest economic and corporate earnings figures. Investors said Friday’s monthly jobs data was a positive for stocks, as it showed strong hiring and contained gains in wage growth, indicating inflation is still in check.
Now, many are looking ahead to second-quarter earnings season, which begins in earnest Friday with some of the nation’s largest banks, to see how the trade threat is affecting companies.
“It hasn’t filtered through yet into areas that would make it an actual hard data issue,” said Steven Chiavarone, assistant vice president and portfolio manager at Federated Investors. “I don’t think we’re going to see it in the earnings numbers, but where we could see it is in some of the guidance and some of the commentary.”
Analysts will also be looking for signs that corporate profits might be peaking. Earnings at companies in the S&P 500 are expected to increase 20.7% from a year earlier, according to Thomson Reuters I/B/E/S. That would be the second-best gain in over seven years.
Gains in commodity prices gave major indexes a boost Monday, with oil continuing to tick higher and metals prices rebounding following a recent slump.
A weaker dollar lifted materials by making them cheaper for overseas buyers. The WSJ Dollar Index, which tracks the dollar against a basket of 16 other currencies, was down 0.2%. The yield on the benchmark 10-year U.S. Treasury note edged up to 2.858%, according to Tradeweb, from 2.831%.
Attention is also expected to shift to this week’s North Atlantic Treaty Organization summit, as relations between the U.S. and its European allies remain strained. President
has taken aim at elements of the trans-Atlantic alliance he insists place unfair burdens on the U.S.
“I’d say there are very few companies that I’m aware of that benefit” from a trade war, said Chris Hillary, chief executive and portfolio manager for Denver-based Roubaix Capital. Still, trade tensions have “played a minor role to date in our decision making,” Mr. Hillary said of his fund, which holds just over $110 million under management and invests in small and midcap U.S. stocks.
Investors have been piling into small-cap stocks with less foreign exposure recently. The S&P Small Cap 600 is up about 12.5% on the year, while the S&P 500 is up roughly 3.5%.
Elsewhere, the Stoxx Europe 600 was up 0.5% in afternoon trading, led by shares of technology companies. The British pound rose against the dollar after U.K. Prime Minister
secured agreement among her government for her Brexit plans late last week and
the minister in charge of negotiating Britain’s exit from the European Union, resigned unexpectedly.
Earlier, a rout in Asian stocks paused. China’s Shanghai Composite Index rose 2.5% and Hong Kong’s Hang Seng was up 1.3%.
Shares of Chinese smartphone maker Xiaomi closed lower in its Hong Kong trading debut, as the broader Hang Seng Index rose 1.3%.
Write to Amrith Ramkumar at email@example.com