After an extended weekend helped put a troubled week behind them, U.S. equities and stock exchange traded funds climbed Monday, with greater optimism over the upcoming earnings announcements strengthening traders’ outlook.
The S&P 500 Index, along with related funds including the SPDR S&P 500 ETF (NYSEArca: SPY), iShares Core S&P 500 ETF (NYSEArca: IVV) and Vanguard 500 Index (NYSEArca: VOO), were up 0.6% Monday after falling off about 1% last week.
U.S. stocks rebounded Monday on signs of economic expansion and signals of improved corporate earnings. Analysts and market observers are closely watching the earnings season amid concerns over the Trump administration’s ability to implement its pro-growth policies.
According to FactSet, U.S. companies are expected to reveal their best quarterly earnings growth since 2011. As of April 13, 6% of S&P 500 companies reported Q1 earnings. About 76% have beat mean earnings-per-share estimates while 59% have beat the mean sales estimate. Additionally, the S&P 500 is expected to see an over-all earnings growth rate of 9.2% for the quarter.
“The bar is high,” Jeff Zipper, a portfolio manager and managing director at U.S. Bank’s Private Client Reserve, told the Wall Street Journal.
Geopolitical risks have gripped the markets and dominated sentiment last week, but the effects seem to be waning. President Donald Trump’s national security adviser, H.R. McMaster, said Sunday that the U.S., its allies and China were working on a number of scenarios to North Korea’s latest failed ballistic missile test.
“We got in and out of the long weekend without any major news or controversy on the geopolitical front,” Art Hogan, chief market strategist at Wunderlich Equity Capital Markets, told Reuters. “The anticipation of better earnings from the first quarter may shift the momentum in the favor of this market at least in the near-term.”
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