U.S. Markets Edge Higher As Investors Focus on Corporate Earnings

U.S. stocks continued their upward momentum on Monday as investors focused on corporate earnings and global economic developments while the U.S. bond market closed for a holiday.

The S&P 500 built on last week’s all-time high, and by midday, the index was up 0.5 percent, extending Friday’s record-breaking performance.

Meanwhile, the Dow Jones Industrial Average overcame an early dip, climbing 118 points, or 0.3 percent, and the Nasdaq composite edged up 0.6 percent.

The modest gains on Wall Street followed a relatively quiet trading session in Europe.

The most significant movement in global markets came from China, where Finance Minister Lan Fo’an provided an eagerly anticipated update on Saturday regarding the country’s economic outlook.

While he hinted at new measures to stimulate the world’s second-largest economy, the lack of specific details left investors wanting more.

This ambiguity triggered mixed reactions across Asian markets.

Shanghai stocks surged 2.1 percent, but Hong Kong’s Hang Seng index fell by 0.7 percent.

Crude oil prices also dropped nearly 2 percent amid growing concerns over China’s slowing economy and its impact on global demand for commodities.

China’s recent rally in equities, driven by hopes of major economic stimulus, has hit a roadblock as investors expressed doubts about the effectiveness of the government’s efforts.

Lisa Shalett, chief investment officer at Morgan Stanley Wealth Management, cautioned that while the government’s measures are “clearly welcome,” they may not be enough to “spur a new reflationary cycle.”

Commodity prices took a hit as concerns about China’s economic health deepened.

Copper and other key materials saw declines, further pressuring mining stocks.

Freeport-McMoRan, one of the largest copper producers, dropped 2.6 percent, marking one of the biggest losses on the S&P 500.

Boeing also faced setbacks, with its shares sliding 1.4 percent.

The aerospace giant revealed that it expects to report a $1.3 billion cash burn in the latest quarter, along with a $9.97 per share loss.

The company also announced plans to lay off 10 percent of its workforce as it contends with a strike that has disrupted production of its best-selling aircraft.

While some sectors struggled, others performed well.

SoFi Technologies saw its stock jump 7.6 percent after announcing a $2 billion loan platform agreement with Fortress Investment Group, allowing SoFi to refer pre-qualified borrowers to the investment firm.

In the biotech sector, Longboard Pharmaceuticals soared 51.2 percent after Danish pharmaceutical giant H. Lundbeck announced plans to acquire the company in an all-cash deal worth $2.6 billion.

With few major economic reports expected this week, investor attention will likely remain on corporate earnings.

Reports from several high-profile companies, including Bank of America, Johnson & Johnson and UnitedHealth Group, are due on Tuesday.

Later in the week, results from United Airlines, Netflix, American Express and Procter & Gamble will follow.

Analysts expect S&P 500 companies to post a 4.1 percent increase in earnings per share for the latest quarter compared to the same period last year, according to data from FactSet. If accurate, it would mark the fifth consecutive quarter of earnings growth.

Sustained growth in corporate profits could help allay concerns that the stock market is overvalued.

Some critics argue that stock prices have risen faster than underlying earnings, but stronger-than-expected earnings reports could temper those concerns.

The broader market rally has been fueled by optimism that the Federal Reserve’s interest rate cuts will bolster the U.S. economy without triggering a recession.

Recent data showing the economy remains robust has heightened hopes that the Fed can achieve a “soft landing”—reducing inflation to its 2 percent target without causing a significant economic downturn.

This article includes reporting from the Associated Press.