“You had small-caps really get beaten up over the last few days, but today there’s some relief, and that’s pretty much enough to support everything else, at least for today,” said Willie Delwiche, investment strategist at All Star Charts. “At the end of the day, it’s still a bull market. It’s more volatile than it was last year, but the path of least resistance is still higher.”
The S&P 500 rose 38.48 points to 4,173.42. The Dow Jones Industrial Average gained 316.01 points, or 0.9%, to 34,137.31. Both the S&P 500 and Dow hit all-time highs on Friday. The technology-heavy Nasdaq added 163.95 points, or 1.2%, to 13,950.22.
The Russell 2000 index of smaller company stocks, which has been outpacing the broader market all year, led the way higher, climbing 51.42 points, or 2.3%, to 2,239.63.
The yield on the 10-year Treasury held steady at 1.56%.
Much of the market’s focus over the next two weeks will be on individual companies and how well their quarterly results turn out. This week roughly 80 members of the S&P 500 are due to report results, as well as one out of every three members of the Dow. On average, analysts expect quarterly profits across the S&P 500 to climb 24% from a year earlier, according to FactSet.
“Those companies that meet or beat on revenue and paint a nice picture for the rest of the year are being rewarded,” said J.J. Kinahan, chief strategist with TD Ameritrade. “When a railroad company is saying we really see improvement for the second half of the year, that’s a really good sign.”
Railroad operator CSX said its first-quarter profit fell because of higher expenses, but it expects to benefit as the U.S. economy strengthens further over the rest of the year. The stock rose 4.3%
Health care stocks helped lead the broader market higher after several companies reported solid financial results. Surgical device maker Intuitive Surgical rose 9.9% after handily beating analysts’ first-quarter forecasts. Medical device maker Edwards Lifesciences rose 6.3% after also reporting strong financial results.
Netflix slumped 7.4% for the biggest decline in the S&P 500. The video streaming pioneer disappointed investors with its latest report on subscriber additions, which came in below its own forecasts. The gangbuster growth Netflix had seen during the pandemic appeared to be slowing as people start leaving their homes more and as competition from rival services picks up.
Investors are looking to justify the market’s advance this year, despite the lingering pandemic and higher-than-normal unemployment. There are also signs of COVID infections increasing outside the U.S. in major economies such as India and Brazil once again.
