NEW YORK (AP) – Stocks are rising in midday trading Monday following market rallies overseas after the ruling party in Japan won a key election and Friday’s strong employment report in the U.S. The gains put the Standard and Poor’s 500 index on track for a record high close.
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Earnings are expected to fall 3.9 percent in the quarter compared with the year-earlier quarter, according to Thomson Reuters data. The Dow Jones Industrial Average added 50 points, or 0.3%, to 18,200, the S&P 500 index gained 6 points, or 0.3%, to 2,137, while the Nasdaq Composite Index added 25 points, or 0.5%, to 4,983. The S&P 500 was up 7.41 points, or 0.35 percent, at 2,137.31.
Bond prices also fell as investors shifted money out of low-risk assets. Shares of electric auto maker Tesla rose 1.2 percent to $219.40 premarket after CEO Elon Musk on Sunday tweeted his intention to soon publish part two of his “top secret Tesla masterplan”. “But if you looked at what’s going on in the stock market, it’s telling a very different story”. The major index futures are now pointing to a higher open for the markets, with the Dow futures up by 80 points. “The market is back into supply and demand balance”, he said. Last Friday’s jobs report showed the economy added the most jobs in eight months in June, boosting confidence in the USA economy. The yield fell again to as low as 1.358% Monday before recovering to 1.420%, according to Tradeweb.
That is a reversal from recent weeks, when analysts noted that the 2016 rise in utilities and telecommunication stocks, considered bond proxies because they pay high dividends, hasn’t been matched by strength in technology or consumer discretionary shares, where investors typically turn when they expect growth.
The gains in US stocks were broad-based, with seven of the 10 major S&P sectors higher. First-quarter earnings had fallen 5 percent. “When you look at the first five months of the year it has been an emotional roller coaster that has been beset with investor cognitive errors, most glaring of which was discounting the recession that never happened in January and February”, said Julian Emanuel, equity strategist at UBS in NY.
ENERGY: Benchmark U.S. crude fell 25 cents to $45.16 a barrel in NY. Britain’s FTSE 100 added 1.4 percent.
The yield on the 10-year Treasury note rose to 1.40 percent.
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The dollar was last up 1.9 percent against the safe-haven yen at 102.41 yen.
