US equities advanced on Monday as traders prepared for a busy week of earnings, with big names such as Tesla Inc. and Alphabet Inc. set to report.
The S&P 500 Index climbed 0.4% as of 9:47 a.m. in New York, putting it on track for a fresh all-time high. The tech-heavy Nasdaq 100 Index advanced 0.6%. With stocks hovering near records, robust appetite for risk among investors is helping lift the Magnificent Seven, buoying Bloomberg’s gauge for the group of mega-cap tech stocks.
“The S&P 500 continues to hit record highs, though the degree of calm is the main story,” said Nationwide’s Mark Hackett. “Investors have become less reactive to headlines, including news on inflation, the Fed, trade and tariff news, and geopolitical events, with the VIX below the long-term average.”
Hackett noted that the S&P 500 has not registered a move of 1% or more in almost a month.
A new week of earnings kicked off with Verizon Communications Inc. gaining after beating expectations in the second-quarter and raising its profit outlook for the year. Meanwhile, shares of Domino’s Pizza Inc. also rose as the restaurant operator saw better-than-expected comparable sales growth.
Morgan Stanley advised investors to stay bullish on US stocks, highlighting underappreciated tailwinds from earnings momentum, positive operating leverage and cash tax savings. Strategists led by Michael Wilson said they were leaning toward their bull case scenario of 7,200 for the S&P 500 by the middle of next year. The index was recently at 6,314.
Meanwhile, Goldman Sachs strategists including David Kostin said the recent weakness in the dollar provided a small tailwind to S&P 500 earnings, partially offsetting tariff earnings pressure.
“Although valuations are elevated, a large component of the S&P 500 consists of large-cap tech stocks, which command higher multiples due to their consistent growth, incredibly strong cash flows and profit margins,” said Richard Saperstein, chief investment officer at Treasury Partners. “Valuation isn’t a reliable indicator for future market direction.”
Market participants are also keeping their eye on President Donald Trump’s trade agenda, with the August 1 deadline fast approaching. Negotiators from the European Union and US are heading into another week of intensive talks, with the former trying to avoid being hit with 30% tariffs on exports.
Investors will be paying close attention to how uncertainty over tariffs is hitting the results of US corporations. Companies accounting for about a fifth of the S&P 500’s market capitalization are expected to post results this week. Levies are likely to be even more of a focus for automakers, after Stellantis NV announced a €2.3 billion first-half net loss as it tallies the costs of trade wars and scraps investments in electric and hydrogen vehicles to account for reduced demand.
“It is becoming more and more evident that the Trump Administration is going to be tougher on the tariff issue going forward,” said Miller Tabak’s Matt Maley. “So, it’s important to decide whether this is something the stock market is pricing in right now.”
Among other notable movers, Microsoft Corp. declined after warning hackers are actively targeting customers of its document management software Sharepoint. Sarepta Therapeutics Inc. tumbled after the drugmaker refused to pause all shipments of its Elevidys treatment following three deaths that were linked to the company’s gene therapies.
A message from Advisor Perspectives and VettaFi: To learn more about this and other topics, check out some of our webcasts.
Bloomberg News provided this article. For more articles like this please visit
bloomberg.com.
Read more articles by Joel Leon
