"You've got this expiration week and you've got a lot of put open interest that's about to expire," says Salamone. " In the absence of any negative news, you can get an unwind related to the expirations that creates a short covering rally into the Friday expirations."
"Once you get through the first and second week of earnings season and establish a better-than-expected trend, which is what the market is probably rallying on, earnings becomes less of a factor," adds Cardillo. "But it's still important to the market's fundamentals. I think the earnings season and the prospect of moderate economic growth is setting the stage for the fear factor of sell in May."
A wave of strong early earnings reports aided sentiment. Coca-Cola (KO), the beverage giant, reported first-quarter net income of $2.05 billion, or 89 cents a share, up from year-earlier earnings of $1.9 billion, or 82 cents. The company's first-quarter net operating revenue was $11.1 billion.
Coca-Cola's volume increased 5% in the first quarter with 20% volume growth in India and 9% growth in China. Coca-Cola was expected by analysts Tuesday to post first-quarter profit of 88 cents a share on revenue of $10.82 billion. Shares of Coca-Cola rose 2.1% to close at $73.95.Consumer goods and drug giant Johnson & Johnson topped Wall Street's view, posting first-quarter adjusted earnings of $3.8 billion, or $1.37 a share. The performance topped year-earlier earnings of $3.7 billion, or $1.36 a share. Analysts, on average, were calling for earnings of $1.35 a share. Global consumer sales at J&J totaled $3.6 billion, down 2.4% from last year. U.S. sales fell 2.2% and international sales declined 2.5%. Shares of J&J added 0.4% at $64.22. Goldman Sachs (GS) posted better-than-expected first-quarter earnings of $2.1 billion, or $3.92 a share, beating the $3.55 a share expected by analysts polled by Thomson Reuters, but falling from earnings of $4.38 a share last year. Goldman's earnings narrowly beat estimates driven by aggressive cost-cutting and strong investment banking and trading revenues, though revenue fell throughout most of the firm's businesses. Goldman also said it plans to increase its quarterly dividend to 46 cents per share from 35 cents. Shares dipped 0.7% to close at $116.86.
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