Wall Street’s main indexes closed at their highest levels ever on Monday, lifted by Tesla and bank stocks as investors eyed the start of the second-quarter earnings season and a batch of economic data. Canada’s TSX was modestly lower for the session, with materials and energy stocks weighing on the index.
The S&P 500 financials, communication services and real estate sector indexes each gained more than 0.8%.
Tesla rallied over 4% and was a major contributor to gains in the S&P 500 and Nasdaq. CEO Elon Musk insisted in court on Monday he does not control Tesla, and he said he did not enjoy being the electric vehicle company’s chief executive as he took the stand to defend the company’s 2016 acquisition of SolarCity.
The S&P 500 banks index climbed 1.3% ahead of quarterly earnings reports this week from major banks, including Goldman Sachs and JPMorgan on Tuesday. JPMorgan Chase rose over 1% and Goldman Sachs rallied more than 2%, fueling the Dow’s gains.
The S&P/TSX Composite Index closed down 24.87 points, or 0.12%, at 20,233.08. The energy sector fell 1.18% and materials 0.71%. Industrials was also a weak spot, falling 0.83%. Financials gained about half a percentage point in Toronto.
Despite a lower finish for the Composite, there were some tasty gains to be had. Goodfood Market, a meal-kit service provider that garnered a lot of attention in the early days of the pandemic, closed up 10.78%, and MTY Food Group gained 7.32%. Both companies reported earnings last week that were generally well received by investors and analysts.
Investors will closely watch quarterly reports for early clues on the how long the U.S. economic recovery may last, with June-quarter earnings per share for S&P 500 companies expected to rise 66%, according to IBES data from Refinitiv.
The S&P 500 has rallied about 17% so far this year, with some investors questioning how long Wall Street’s rally may last and concerned about a potential downturn.
“Earnings season is going to be warmly greeted as an opportunity for existing biases to be confirmed,” warned Mike Zigmont, head of trading and research at Harvest Volatility Management in New York. “Even if forecasts are not as rosy as what the most bullish had hoped, it’s all going to get rationalized away.”
Focus this week will also be on a series of economic reports, including headline U.S. inflation data and retail sales. As well, Federal Reserve Chair Jerome Powell is due to appear before Congress on Wednesday and Thursday for views on inflation.
Investors have been concerned about higher inflation and the spread of the Delta coronavirus variant in the past few sessions, with traders seesawing between a preference for economy linked-value stocks and tech-heavy growth names.
The Dow Jones Industrial Average rose 0.36% to end at 34,996.18 points, while the S&P 500 gained 0.35% to 4,384.63. The Nasdaq Composite climbed 0.21% to 14,733.24.
Walt Disney jumped over 4% to a two-month high after it and Marvel’s “Black Widow” superhero movie took in $80 million in its first weekend. And the entertainment company plans to raise prices for its ESPN Plus streaming service.
Didi Global Inc dropped about 7% after it confirmed China’s cyberspace administration notified app stores to remove the ride-hailing company’s 25 apps and said the move could impact its revenue in the region.
Virgin Galactic Holdings tumbled 17% after the space tourism company said it may sell up to $500 million worth of shares, a day after the company completed its first fully crewed test flight into space with billionaire founder Richard Branson on board.
Volume on U.S. exchanges was 8.3 billion shares, compared with the 10.5 billion average for the full session over the last 20 trading days. Advancing issues outnumbered declining ones on the NYSE by a 1.43-to-1 ratio; on Nasdaq, a 1.11-to-1 ratio favored advancers. The S&P 500 posted 66 new 52-week highs and no new lows; the Nasdaq Composite recorded 85 new highs and 38 new lows.
Oil slumped on Monday over concerns about spreading COVID-19 variants derailing the global economic recovery that has brought fuel demand to near pre-pandemic levels, while tight crude supplies kept prices from falling lower.
Brent crude for September settled at $75.16 a barrel, losing 39 cents, or 0.5%. U.S. West Texas Intermediate crude for August settled at $74.10 a barrel, down 46 cents, or 0.6%.
Both benchmarks shed about 1% last week, stalling out a rally that had brought both U.S. crude and Brent to levels not seen since October 2018.
Tokyo reimposed pandemic-related restrictions due to concerns over coronavirus infections, less than two weeks before the city hosts the Summer Olympic Games.
“It has raised hackles in the market about demand recovery again,” said John Kilduff, a partner at Again Capital in New York. “Asia is obviously essential. It’s a swing demand center, and this is a huge setback.”
The spread of new variants and unequal access to vaccines threaten the global economic recovery, finance chiefs of the G20 large economies said over the weekend. The remarks weighed on the oil demand outlook.
Reuters, Globe staff
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