Midday Market Update: Stocks Soar as Investors Prep For Earnings

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Stock gains accelerated by midday Monday, as investors prepare for earnings season. Many stocks are in correction territory and positive economic data from the second quarter bodes well for earnings reports. 

All three major U.S. indices rose hugely Monday, with the S&P 500 up 1.35%, better than the morning’s gain of 0.8%. The tech-heavy Nasdaq rose more than 1.6%. The 10-Year Treasury yield, which was rising in the morning — a bullish signal — was flat at 0.65% by midday. 

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. 

With tech stocks leading the market, as investors favor growth of value during economic uncertainty, Apple  (AAPL) - Get Report rose 3.5% to just under $400 a share. Analysts at Wedbush Securities and Morgan Stanley raised their price targets, as they see iPhone demand accelerating into 2021, especially for the iPhone 12. The $1.7 trillion Apple has an enormous market cap weighing in the S&P 500. 

Banks, which are in the midst of a bear market since June 8, but also a more than 5% two-day surge, report earnings this week. Large cap consumer discretionary and industrials rose about 1%. 

Consumer staples stocks rose, but trailed the market, as Pepsico's  (PEP) - Get Report solid food sales in grocery locations bodes well for groceries and staples, giving investors confidence in the ability to buy defensive names should there be more market volatility. Pepsi rose more than 2%. 

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