U.S. stocks closed higher during Monday’s trading session as another round of critical earnings got underway. Investors remain focused on results from financial institutions following the failure of Silicon Valley Bank last month.
At the close, the S&P 500 (^GSPC) edged up 0.33%, the technology-heavy Nasdaq Composite (^IXIC) gained 0.28% and the Dow Jones Industrial Average (^DJI) added 0.30%.
Bond yields were up. The yield on the 10-year note climbed to 3.597%, while the two-year note yields gained to 4.188% Monday.
First Bank (FRBA), Pinnacle Financial Partners, Inc. (PNFP), ServisFirst Bancshares, Inc. (SFBS), and CrossFirst Bankshares, Inc. (CFB) are slated to report after the close Monday, providing more insight on the banking sector.
On the commodities front, gold futures (GC=F) are holding on to key levels above $2,000 per ounce on the back of hawkish rate hikes comments from Federal Reserve officials last week. Crude oil (CL=F) hovered above $80 a barrel as gas prices nationally climbed to $3.673 for the past week, AAA data showed.
Stocks ended lower on Friday, with the Dow Jones Industrial Average down more than 100 points as disappointing data on March retail sales offset excitement after corporate earnings reports. Still, the index notched its fourth consecutive weekly gain.
On Friday, the first round of earnings kicked off since the collapse of Silicon Valley Bank and Signature Bank, with JPMorgan (JPM) reporting a record quarterly revenue that beat analyst estimates, boosting the stock 7.5%. On the same day, Citi (C) and Wells Fargo (WFC) also topped expectations.
Earnings season will pick up steam, with another host of bank earnings on deck this week. On Tuesday, Bank of America (BAC), Goldman Sachs (GS), Bank of New York Mellon (BK) will report before the bell; First Horizon (FHN), Western Alliance (WAL), United Airlines (UAL) and Netflix (NFLX) are due after the market closes.
On the economic front, the NY Fed Empire State manufacturing survey’s general business conditions index rose to 10.8 in April, up from March’s negative reading of 24.6. The reading beat analysts expectations of a negative 18.0.
As housing data takes center stage, confidence among US single-family homebuilders climbed in April, the fourth-straight month this measure has increased as declining mortgage rates and low inventory bolster demand for new homes, according to the National Association of Home Builders.
Next up, housing starts, existing home sales, and mortgage rate and application data are all scheduled for release this week. The data will give investors a clearer snapshot of the housing market amid a slightly softening rate environment.
Outside of housing, unemployment and PMI data is anticipated, each of which could provide insight into the Fed’s decision making ahead of its blackout period, which starts on Saturday.
Separately, U.S. Treasury Secretary Janet Yellen said during an interview that tighter lending standards following recent bank failures could substitute for further rate hikes. Eight Fed officials are slated to speak this week, and market strategists are waiting to see if they will all agree.
Meanwhile, traders are betting that the doom and gloom could be over – for now. The Cboe Volatility Index, or Wall Street’s “fear gauge,” the VIX marked its lowest close on Friday in more than a year. At the moment, traders are focused on earnings rather than the systemic issues following the banking turmoil, Tallbacken Capital Advisors noted.
Still, markets have priced in a 86% probability that the Federal Reserve will raise interest rates by another 0.25% in May, according to data from the CME Group.