Traders on the floor of the New York Stock Exchange.
Stocks were flat near records on Monday as investors waited for the earnings season to start for the second quarter of this week.
The S&P 500 and Nasdaq Composite were essentially flat on Monday. The Dow Jones Industrial average added around 93 points. The three major indices closed on Friday at record highs, with the S&P 500 now standing at over 16% year-on-year.
Investors may be waiting to get more clarity from this profitable season before taking their next move. JPMorgan Chase and Goldman Sachs will be among the first big companies to report before the bell on Tuesday. Both were a bit higher on Monday.
FactSet estimates that earnings in the second quarter are expected to increase more than 64% from levels depleted by the pandemic a year ago. If companies meet these estimates, it will be the largest growth rate since the last quarter of 2009, when the market weathered the Great Financial Crisis.
The markets were largely turbulent on Monday. Names associated with the economic comeback from the pandemic were slightly weaker, with Boeing and General Electric being lower.
Tech stocks showed strength, with Tesla and Nvidia rising higher. Some defensive areas such as healthcare also performed well, with Pfizer and Johnson & Johnson up.
Earning season will largely be the driver of the markets for the coming weeks, and the first signs are good. To date, 66 S&P 500 companies have released positive earnings guidance in their second quarter reports, the highest number since FactSet started tracking the number. All 11 sectors of the market will see growth, with energy, industrials, consumer discretionary, finance and materials seeing the biggest gains as the economy reopens.
“The continued earnings momentum should boost investor confidence in the recovery amid slowing concerns and drive a rotation back into value,” Bank of America’s Savita Subramanian said in a statement on Sunday.
In addition to JPMorgan and Goldman Sachs, Pepsico will also report on Tuesday before the bell. Bank of America, Citigroup, Wells Fargo, Delta Air Lines and BlackRock are reporting on Wednesday, and Morgan Stanley, Truist and UnitedHealth are releasing the results on Thursday.
Investors also expect key data to be released this week, including key inflation data on Tuesday and Wednesday and June retail sales on Friday.
Federal Reserve Chairman Jerome Powell will testify in front of Congress on Wednesday and Thursday.
“The market today is in a dormant state ahead of tomorrow’s CPI number and Powell’s statement,” said Peter Boockvar, CNBC employee and chief investment officer at Bleakley Advisory Group. “Although the receipts will of course be important, most of the receipts really won’t come out until next week or two.”
“So while we’re focusing on what banks have to say … right now it’s all about tomorrow’s CPI, it’s all about what Powell says and if he points to the taper sooner rather than later,” added Boockvar added.