Stocks Climb to Record With Earnings, Fed in Focus: Markets Wrap

(Bloomberg) -- U.S. equities extended their run to all-time highs on Monday, with with megacap technology companies leading the way higher as investors weighed the outlook for growth at the start of a busy week of earnings and policy updates.

Tesla Inc. was among those providing the biggest boost to the S&P 500, rising for the first time in four sessions and then extending gains in postmarket trading after second-quarter results beat analysts’ estimates. Gains in other heavyweights set to report earnings later this week including Apple Inc., Amazon.com Inc., Alphabet Inc. and Facebook Inc. also propelled the benchmark index.

While a positive start to the earnings season has helped push stocks to their best five-day streak of gains since March, volatility returned to the market on Monday as some investors remain worried about the pace of economic growth and inflation. Concern also has been mounting that the Covid-19 delta variant will derail the recovery. The real yield on U.S. 10-year debt touched a record low ahead of this week’s Federal Reserve meeting, at which officials will likely discuss the outlook for stimulus.

“We’re heading into a very eventful week with big tech earnings and a Fed meeting,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “The market showed how resilient it was last week, with the impressive bounce-back from the sustained selling on Monday, but we expect more caution as all eyes (and ears) turn to the Fed.”

Read more: Whipsawed Bond Traders Hunker Down for the Return of the Fed

The Nasdaq 100 and Dow Jones Industrial Average also ended Monday’s session at record highs. Seven of the main 11 S&P 500 industry groups advanced. Energy stocks climbed the most, despite weakness in crude prices. Royal Dutch Shell Plc kicks off second-quarter earnings for oil majors on Thursday. The earnings season is expected to show higher profits, falling debt and better returns in the sector.

Trade tension is on the radar too. China lashed out at U.S. policies in a tense start to high-level talks in Tianjin, declaring the relationship between the world’s two largest economies in a “stalemate.”

Elsewhere, Bitcoin surpassed $40,000, extending recent gains amid speculation that Amazon may be considering accepting the digital currency as a method of payment. Cryptocurrency-linked stocks including MicroStrategy Inc. and Coinbase Global Inc. also rallied.

Here are some key events to watch this week:

• Tesla, Alphabet, Apple, Facebook, Amazon report earnings this week
• Federal Reserve policy meeting concludes Wednesday
• U.S. GDP data are due Thursday

These are some of the main moves in markets:

Stocks

• The S&P 500 rose 0.2% as of 4:09 p.m. New York time
• The Nasdaq 100 rose 0.1%
• The Dow Jones Industrial Average rose 0.2%
• The MSCI World index was little changed

Currencies

• The Bloomberg Dollar Spot Index fell 0.2%
• The euro rose 0.3% to $1.1805
• The British pound rose 0.5% to $1.3818
• The Japanese yen rose 0.1% to 110.39 per dollar

Bonds

• The yield on 10-year Treasuries advanced two basis points to 1.29%
• Germany’s 10-year yield was little changed at -0.42%
• Britain’s 10-year yield declined one basis point to 0.57%

Commodities

• West Texas Intermediate crude rose 0.1% to $72.17 a barrel
• Gold futures fell 0.3% to $1,801.20 an ounce

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