By Saumya Vaishampayan
U.S. stocks rose for the second session in a row Monday, with
the S&P 500 ending just shy of a record.
The S&P 500 gained 6.20 points, or 0.3%, to end at 2114.49,
the highest level since April 28. The S&P last hit a record on
April 24, when it closed at 2117.69.
The Dow Jones Industrial Average added 46.34 points, or 0.3%, to
18070.40, and the Nasdaq Composite rose 11.54 points, or 0.2%, to
5016.93.
Traders said there wasn't one piece of news driving Monday's
advance. A handful of better-than-expected earnings reports and
gains in European and Chinese shares added to the positive
tone.
"Now the question is if the market can truly break out to new
highs," said Bill Nichols, head of U.S. equities at Cantor
Fitzgerald. The S&P 500 fell in three of the four sessions
after hitting its last all-time closing high on April 24, pulling
back 1.5%. "History has shown recently that you sell this rally,"
he said.
Action in the U.S. stock market has been choppy this year, as
investors grapple with evidence of an economic slowdown, the strong
dollar's drag on earnings and the possibility of higher interest
rates. The Dow fell in January, rallied in February, pulled back in
March and eked out a gain in April. The blue-chip index has gained
1.4% for the year. The S&P 500 has advanced 2.7% and the Nasdaq
Composite is up 5.9% in the same period.
Wayne Lin, a portfolio manager at QS Investors, said he views
the slowdown in U.S. economic growth as temporary and remains
positive on stocks for the year. He said he's focused on monetary
policy in Europe and Japan aimed at reviving growth, which could
boost demand for goods produced by U.S. companies and lead to
higher earnings. "If these efforts lead to growth, that's going to
be very positive for the global economy, for U.S. companies, for
U.S. earnings, and ultimately for stock valuations," he said.
Seven of the S&P 500's 10 sectors advanced Monday. Financial
stocks gained the most, up 1%, followed by a 0.7% increase in
utilities stocks.
Among financial stocks, Berkshire Hathaway Inc. Class B shares
rose 1.9%. The conglomerate, controlled by Warren Buffett, said
Friday its net profit rose 10% in the first quarter. Berkshire held
its annual shareholder meeting over the weekend.
Bank of America Corp. shares rose 2%. The bank said Monday it
would offer shareholders the chance to vote on the board's decision
to give the chairmanship to Chief Executive Brian Moynihan.
Last week's Federal Reserve statement, which didn't signal any
shift in its policy stance, paved the way for a rebound in stocks,
said J.T. Cacciabaudo, global head of equity sales trading at
Sterne Agee CRT. "People like certainty versus uncertainty," he
said.
Overseas, European stocks advanced after data showed the
eurozone's manufacturing sector expanded in April, though at a
slightly slower pace than in March. Germany's DAX gained 1.4% and
France's CAC 40 rose 0.7%.
Data showing a slowdown in Chinese manufacturing activity in
April suggested Beijing may need to take further steps to bolster
the economy, boosting stocks. The Shanghai Composite Index rose
0.9%.
Friday's employment report is the highlight of U.S. economic
news this week, investors said. The report is expected to show
employers added 228,000 jobs in April, according to economists
surveyed by The Wall Street Journal. The unemployment rate is
expected to tick down to 5.4% from 5.5%.
Investors continued to watch first-quarter earnings. Including
results from 372 companies in the S&P 500, earnings growth is
on track to be roughly flat in the first quarter from a year ago.
That compares with expectations of a 4.6% decline going into the
reporting season.
Comcast Corp. reported better-than-expected profit and revenue
growth in its first quarter, as its broadband division posted its
strongest revenue growth in more than four years. The company also
announced it will spend another $2.5 billion buying back shares
this year. Shares rose 0.6%.
Tyson Foods Inc. said its profit rose 46% in the first three
months of the year, topping expectations. Sales growth came in
slightly below expectations as the company faced lower prices for
pork and chicken. Shares rose 1.5%.
In other corporate news, McDonald's Corp. announced plans to
restructure its global business that will cut $300 million in
annual costs. Shares fell 1.7%.
In commodity markets, gold futures rose 1% to $1186.80 an ounce.
Crude-oil futures fell 0.4% to $58.93 a barrel.
The yield on the 10-year Treasury note inched up to 2.135% from
2.119% on Friday. Yields rise as prices fall.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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