Stocks Begin Earnings Week on Firmer Footing
NEW YORK ( TheStreet) -- Major U.S. stock markets shifted higher Monday, with the S&P 500 posting a third straight session of gains, as 10-year Treasury yields stabilized and investors awaited the start of the new earnings season.
The S&P 500 gained 0.53% to 1,640.46.
"It's absolutely a quiet day and the market continues to grind higher," which suggests traders are warming up to pre-financial crisis fundamentals of correlated rising bond yields and equities, said Phil Orlando, chief equity strategist at Federated Investors.
Three energy stocks were the top percentage gainers on the S&P on Monday. Shares of Peabody Energy
U.S. stocks surged Friday after shaking off early concerns that the strong jobs growth in June might prompt the Federal Reserve to curb the stimulus measures that have fueled equity markets for more than 18 months.
After the report, the 10-year yield spiked to 2.725%, the highest level since August 2011, before showing signs of easing on Monday. Investors have been concerned about a rebound in interest rates before homebuyers and businesses were ready amid signs of the economy getting better and the possibility of reduced Fed support.
The benchmark 10-year Treasury was rising 27/32 Monday, diluting the yield to 2.643%.
A Thomson Reuters report says that of the 22 companies in the S&P 500 that have reported earnings to date for the second quarter, 64% have reported earnings above analyst expectations. This is higher than the long-term average of 63% but below the average over the past four quarters of 67%. Thomson Reuters said that second-quarter earnings in 2013 are expected to grow 2.9% over the same time last year.
The report adds that 45% of companies have reported second-quarter revenue above analyst expectations, which is lower than the long-term average of 61% and below the average over the past four quarters of 48%.
The U.S. economic calendar was light Monday, with the Federal Reserve reporting that consumer credit in May rose $19.6 billion, after a rise of $11.1 billion in April. Economists expected an increase of $12.5 billion.
Minutes from the Federal Open Market Committee's June 18 to 19 meeting are due out Wednesday, with Federal Reserve Chairman Ben Bernanke scheduled to speak in Boston on the same day. Investors will be watching both events for more clues into the timing of Fed's stimulus tapering and any specific guidelines from which these decisions will be made.