Yahoo Finance Stock market news live updates: Stocks rally ahead of big Q3 earnings week
U.S. stocks soared on Monday — buoyed by a round of solid bank results and a reversal of tax cut plans in the U.K. — as investors assembled for a big week of corporate earnings.
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The S&P 500 (^GSPC) closed up 2.7%, while the Dow Jones Industrial Average (^DJI) gained more than 550 points, or 1.9%. The technology-heavy Nasdaq Composite (^IXIC) surged 3.4%.
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Bank of America (BAC) was the penultimate of the country’s six largest banks by assets to report earnings on Monday. Shares rose more than 6% after the company revealed trading revenue that beat Wall Street estimates. Stronger-than-expected results from Bank of New York Mellon (BK) and brokerage Charles Schwab (SCHW) also helped lift sentiment.
Like its bank peers, however, BofA saw profit slump during the period as it set aside funds for uncollected loan payments in the event of increased defaults if the economy enters a recession. Goldman Sachs (GS), Wall Street's premier investment bank, is set to report before the opening bell on Tuesday.
Central bank drama continued across the Atlantic to start the week. The Bank of England on Monday morning said it would restart bond sales next week after an emergency rescue intervention that involved a pause on selling to stabilize financial markets. U.K. Finance Minister Jeremy Hunt also reversed most of the fiscal package that prompted the sell-off in U.K. assets, including plans to cut taxes. Sterling jumped by as much as 1.4% following the turnaround on the economic agenda.
Monday's moves come after a roller-coaster week on Wall Street that saw the S&P 500 log its fifth-largest intraday reversal from a low in history Thursday, even as consumer price data showed inflation continued a stubborn run across the U.S. economy last month. Still, the benchmark index ended the week lower.
Wall Street has turned its attention to how Corporate America is holding up against the backdrop of persistently high prices and the Federal Reserve’s efforts to stabilize them as businesses roll out third-quarter financials. Bellwethers including Netflix (NFLX), Tesla (TSLA), and IBM (IBM) are scheduled to unveil results through Friday.
The start of Q3 earnings season has been weaker than usual, with smaller than average positive earnings and revenue surprises from results that have come out so far. Of roughly 7% of the companies in the S&P 500 index that have reported third-quarter figures to date, 69% have notched earnings per share above estimates – below the five-year average beat of 77%, according to FactSet Research.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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