Stocks Rise as Q2 Earnings Season Begins

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Stocks were rising Monday as investors prepare for a big week of earnings. 

In a somewhat broad sector rally, the S&P 500 rose 0.8%, although tech stocks were once again outpacing, with the Nasdaq up more than 1%. The 10-Year Treasury yield rose marginally to 0.66%. 

Banks, big tech and consumer staples companies will report earnings this week and some investors see a decent possibility of a beat of expectations. Economic data has recently been better than expected. Jobless claims are diminishing, but not consistently beating expectations. 

But retail sales spiked 16% year-over-year in the month of May, as pent-up demand from lockdowns and a combination of fiscal and monetary stimulus kept the consumer more than afloat. 

Oil stocks fell a bit, as did bank stocks, which rose about 5% Friday, as some evidence suggests banks could beat expectations. This came after both sectors were rising in premarket trading. 

Consumer discretionary rose 0.35%. Large cap consumer staples were flat to up slightly. Large cap industrials rose about 0.4%. Big tech shined, with the NYSE FANG Index up more than 2%. 

In the past two trading days, the S&P 500  is up about 1.8%, with many sectors participating. And with bank stocks and other large cap cyclicals in correction territory from June 8 levels, investors haven’t been shy about buying some of those stocks. "Of course, with the consensus appearing to be so solidly bearish, there’s always the potential for surprise moves if a given company’s bad numbers aren’t as bad as forecasted,” wrote Chris Larkin managing director of trading and Investment product at E*Trade, in emailed remarks to reporters. 

Pepsi  (PEP) - Get Report beat revenue and earnings estimates. The stock rose 0.7%. Revenue fell 3% and earnings fell more harshly. The lack of sporting events, restaurants being shut down and other large-gatherings bring canceled, hurt sales, but the company was able to beat estimates because of a surge in snacks and food bought at the grocery store. Pepsi did not give guidance, although investors were prepared for that outcome, as a lack of uncertainty remains in theme amongst management teams in various sectors. 

Apple  (AAPL) - Get Report rose more than 2% to $392 a share. Apple is now worth more than $1.6 trillion and has a huge market cap weighing in the S&P 500. Analysts at Morgan Stanley and Wedbush Securities raised their price targets on the stock, as they see strong iPhone 12 and other iPhone demand into 2021. The iShares PHLS Semiconductor etf  (SOXX) - Get Report, the components of which have both growth-like and cyclical qualities and are part of the 5G cycle, rose 2%.  

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