U.S. stock markets surged in the first trading day of the week driven by robust first-quarter 2018 earnings results and easing of geopolitical tensions at least for the time being. Monday’s positive market movements were broad-based as all the major indexes closed in the green.
The Dow Jones Industrial Average (DJI) closed at 24,573.04, gaining 0.9% or 212.9 points. The S&P 500 Index (INX) increased 0.8% to close at 2,677.84. The Nasdaq Composite Index (IXIC) closed at 7,156.28, increasing 0.7%. A total of 5.74 billion shares were traded on Monday, higher than the last 20-session average of 7.03 billion shares. Advancers outnumbered decliners on the NYSE by 2.7-to-1 ratio. On the Nasdaq, advancers had an edge over decliners by 1.82 to-1 ratio. The CBOE VIX declined 4.9% and closed at 16.56.
How Did the Benchmarks Perform?
The Dow gained 0.9% with 25 stocks of the 30-stock index closing in the green while five stocks traded in the red. Notably, the blue-chip index closed above its 50-day moving average. Dow breached this psychological barrier for the first time since Mar 13 and closed above it for the first time since Mar 9 indicating positive investor sentiment.
S&P 500 increased 0.8% led by 1.4% gain of the Utilities Select Sector SPDR (XLU) and 1.3% increase of the Materials Select Sector SPDR (XLB). Each of the 11 sectors of the benchmark index ended in positive territory with five of them gaining more than 1%. Notably, S&P 500 returned to positive territory for the year and Monday’s closing was its highest since Mar 22. Moreover, the benchmark index posted 11 new 52-week highs and no new lows.
The tech-heavy Nasdaq Composite also gained 0.7% driven by a sharp increase in technology and telecom stocks. The index recorded 68 new 52-week highs and 36 new 52-week lows.
Strong Earnings Momentum
First quarter earnings results have been showing strong momentum so far. Investors have pinned high hopes on first-quarter 2018 earnings. Total earnings of the S&P 500 index is expected to be up 16.6% from the same period last year backed by 7.5% year-over-year growth in revenues. A big driver of these positive revisions is obviously the direct impact of the tax cuts. (Read More: Why is the Market Unimpressed with Bank Earnings?)
Major companies that reported earnings results on Monday include Bank of America Corp. (BAC - Free Report) and The Charles Schwab Corp. (SCHW - Free Report) . Each of them reported better-than-expected earnings results and consequently, stock price increased by 0.4% and 4%, respectively.
Bank of America’s first-quarter 2018 earnings of $0.62 per share outpaced the Zacks Consensus Estimate of $0.59. Net revenues as reported were $23.1 billion, which topped the Zacks Consensus Estimate of $22.9 billion. (Read More: BofA Tops Q1 Earnings on Higher Rates, Equity Trading).
The Charles Schwab first-quarter 2018 earnings of $0.55 per share outpaced the Zacks Consensus Estimate of $0.54. Net revenues as reported were $2.40 billion, which topped the Zacks Consensus Estimate of $2.37 billion. (Read More: Schwab Beats on Q1 Earnings and Revenues Estimates)
Geopolitical Tension Eases
Geopolitical tension arising out of a possible air strike by the United States in Syria, which tumbled the market on Friday, faded out at the moment. Secretary of Defense James Mattis announced that the strike was a onetime shot. Notably, Syria is a close ally of Russia. However, investors seem confident that further escalation of the conflict is uncalled for.
The U.S. Commerce Depart reported that retail sales rose 0.6% in March beating the consensus estimate of 0.4%. Auto sales jumped 2%, highest in six months.
Stocks That Made Headlines
J. B. Hunt's Q1 Earnings Miss, Revenues Beat, Rise Y/Y
J.B. Hunt Transport Services, Inc. (JBHT - Free Report) reported mixed results in the first quarter of 2018. (Read More)
ConocoPhillips Completes 2018 Winter Appraisal Program
ConocoPhillips (COP - Free Report) has wrapped up its 2018 winter exploration and appraisal program in Alaska. (Read More)
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