Stocks gain ahead of corporate earnings kickoff
NEW YORK — The stock market is rising Monday, ahead of the start of earnings season and on increasing confidence that the economy can support profit growth for U.S. companies.
Aluminum producer Alcoa, the first company in the Dow to announce earnings, will report its second-quarter results after the market closes. Banks JPMorgan and Wells Fargo are also among companies that will report earnings this week.
Analysts predict that earnings growth for companies in the Standard & Poor's 500 index rose 3 percent in the second quarter. While growth is down from 5 percent in the first quarter, earnings are expected to remain close to record levels.
Like in the first quarter, investors and traders will search for evidence that companies are increasing revenues, not just cutting costs to boost profits. Sales growth is predicted to fall 0.3 percent in the second quarter.
"We'll be looking to see where revenue comes in," said Jim Dunigan, an executive vice president of investments at PNC.
The Dow Jones industrial average rose 61 points, or 0.4 percent, to 15,196.81, as of 12:53 p.m. The Standard & Poor's 500 index gained six points, or 0.3 percent, to 1,637. The Nasdaq composite fell three points, or 0.1 percent, to 3,481.
Eight of 10 industry groups in the S&P 500 rose, led by utilities.
In government bond trading, the yield on the 10-year government note pulled back from a two-year high of 2.74 Friday. It fell to 2.66 percent on Monday.
The yield had jumped after the government reported strong U.S. hiring for June on Friday. Investors believe that the improving jobs market will prompt the Federal Reserve to ease back on its bond-buying program. The Fed is buying $85 billion in bonds each month to keep interest rates low and spur borrowing and investing.
In commodities trading, the price of oil was little changed at $103.16 a barrel. The price of gold rose $21.50, or 1.8 percent, to $1,235.20 an ounce.
Among stocks making big moves today;
Dell rose 37 cents, or 2.8 percent, to $13.40 after an advisory firm recommended that company shareholders vote to allow Dell's founder and an investment firm to take the computer company private. Michael Dell and Silver Lake Partners have offered to buy Dell for $13.65 a share, for a total price of $24.4 billion.
Priceline rose $26.13, or 3 percent, to $880.70 after investment bank Morgan Stanley raised its price target for the online bookings company. Analysts at the bank believe that Priceline can climb as high as $1,010 as it continues to grow internationally and worries about shrinking profits dissipate.
Intel fell 90 cents, or 3.8 percent, to $23.15 after Citigroup cut its estimates on the chipmakers earnings.