The S&P 500 traded slightly higher on Monday as investors prepared for one of the busiest weeks of the earnings season in the first quarter.
The broad reference value for equity increased by 0.2%. The Nasdaq Composite climbed 0.6%. The Dow Jones Industrial Average lost 30 points, dragged by Procter & Gamble, Walmart and Coca Cola. The consumer stapler sector was the biggest loser on Monday, falling more than 1%.
The decline in consumer companies was due to rising commodity prices, which fueled fears of inflation. Corn futures have reached the highest level in more than seven years in volatile trade, while the copper was climbing at the highest level in almost ten years. Goods are a big part of the cost for consumer products.
Tesla shares rose more than 1% ahead of a report by electric car makers after Monday’s bell rang.
Investors are due to a busy week ahead of the Federal Reserve meeting, President Joe Biden’s “American Family Plan” debut, more inflation data, and a torrent of corporate earnings reports.
About a third of the S&P 500 this week is expected to inform investors about the business of their business during the three months ended March 31. Some of the world’s largest technology companies are due to report on the results this week, including Apple,, Microsoft,, Amazon i Alphabet.
Corporations have mostly managed to beat Wall Street forecasts so far in the earnings season. With 25% of companies in the S&P 500 reporting first-quarter results, 84% reported a positive earnings per share surprise, and 77% exceeded earnings estimates.
“Growth continues to improve and liquidity is still abundant,” Andrew Sheets, chief multi-asset strategist at Morgan Stanley, said in a note. “The bull market remains intact and I’m struggling to see the kind of accident that defined the summers of 2010, 2011, 2012 and 2015. But it seems more likely to be a nicer, sharper and summer resort.”
If 84% is the final percentage, it will mean the highest percentage of S&P 500 companies that reported a positive EPS surprise since FactSet began tracking this indicator in 2008.
However, strong results from the first quarter met with a mostly lukewarm reception from investors. Strategists say the already high estimates and almost record high levels on the S&P 500 and Dow have kept retailers ’enthusiasm. Both indices are within 1% of their highest values.
“Despite the strong earnings reports we’ve seen so far, the market is really slowly progressing amid already high estimates,” said Chris Larkin, CEO of trade and product investment in E-Trade.
Data released on Monday showed that new orders for capital goods recovered less than expected in March. The Commerce Department said orders for non-defensive non-aircraft capital goods rose 0.9% last month, missing a Dow Jones estimate of 2.2%.
Stock markets were under pressure last week after several outlets reported that Biden would ask for it increase capital gains tax to wealthy Americans to help pay for the second part of his Better Building agenda. The president is expected to present the $ 1.8 trillion plan in detail, including spending proposals aimed at educating workers and supporting families, at a joint session of Congress Wednesday night.
The proposal would increase the capital gains rate to 39.6% for those earning $ 1 million or more, from currently 20%, according to Bloomberg News.
The S&P 500 ended an unstable week by 0.13% and broke a four-week winning streak. The Dow and Nasdaq fell 0.5% and 0.3%, respectively, last week.
The Fed, which meets on Tuesday and Wednesday, is expected to defend its policy of releasing hot inflation, while assuring markets that it sees price growth only as temporary. Chairman Jerome Powell will host a press conference Wednesday afternoon to discuss the Federal Open Market Committee’s decision.
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