The Nasdaq Composite on Monday set its first record since February as investors looked ahead to a busy week of corporate earnings reports, including from some of the biggest technology companies.
The tech-heavy index gained 121.97 points, or 0.9%, to close at 14138.78, its 13th record close of 2021.
The S&P 500 ticked up 7.45 points, or 0.2%, to 4187.62, also setting a record—its 24th of the year. The Dow Jones Industrial Average slipped 61.92 points, or 0.2%, to 33981.57 and is just 0.6% below its high from earlier this month. All three indexes posted modest declines last week.
Technology stocks have lagged behind other sectors this year, including financials, industrials and energy. While highflying tech stocks led the market’s rebound from the depths of last year’s coronavirus-fueled selloff, investors in recent months have pivoted toward shares of companies with less lofty valuations, as well as economically sensitive stocks that could benefit from a broad post-pandemic recovery.
More than one-third of the companies in the S&P 500 are reporting quarterly results this week. Investors will be watching to see whether the earnings justify rich valuations for some companies, especially in tech.
Tesla, one of investors’ most favored stocks, reported a record quarterly profit as it released earnings after the closing bell. Apple and Facebook are scheduled to report Wednesday, followed by Amazon.com on Thursday.
“Earnings didn’t really matter over the last couple of quarters because investors were focusing on the coronavirus,” said Gregory Perdon, co-chief investment officer at private bank Arbuthnot Latham. “They’ll start to look under the bonnet more than they have.”
Stocks have been jittery in recent days after flare-ups of Covid-19 cases in India and Japan triggered concerns about the pace of the global economic recovery. Money managers’ risk appetite also was jolted by worry that the Biden administration may boost taxes.
The Federal Reserve’s key interest-rate-setting committee is set to hold its monthly policy meeting this week. Investors will be on alert for any change in tone and outlook from the Fed following a spate of strong U.S. economic data. Loose monetary policy from the U.S. central bank has underpinned the stock market’s rally, and any sign of a shift toward a more inflation-fighting posture could spook the markets.
“The glaring risk is that the market loses confidence in the Fed’s handling of inflation,” said Eric Mintz, co-portfolio manager at Eagle Asset Management. “If the market thinks the Fed is behind the eight ball, that could derail things.”
The 10-year U.S. Treasury yield edged up to 1.568%, from 1.566% Friday. Yields rise as prices fall.
Despite progress on vaccinations, the pandemic remains another risk for investors. India has experienced a surge in Covid-19 cases in recent weeks after loosening restrictions. Highly contagious variants that are now spreading around the globe are potentially serving as an accelerant. The outbreak threatens to extend the pandemic itself, driving world-wide numbers to new highs.
“This is a clear setback and adds significant uncertainty,” said Hugh Gimber, a strategist at J.P. Morgan Asset Management. “It is a reminder that investors, throughout the course of this year, are going to be dealing with this huge risk of the resurgence of Covid-19.”
Futures of Brent crude oil, the international energy benchmark, fell 0.7% to $65.65 a barrel as the Covid-19 crisis in India threatened to sap demand for energy.
In corporate news, Albertsons tumbled 96 cents, or 5%, to $18.22 after the supermarket chain reported a quarterly loss and said it expects sales to slow this year from 2020, when coronavirus lockdowns prompted heavy demand for food from grocers.
In cryptocurrencies, bitcoin jumped nearly 11% to $53,297. The digital currency has rebounded since falling below $50,000 last week, though it is still down more than 15% from the all-time high it reached earlier this month.
Overseas, the pan-continental Stoxx Europe 600 rose 0.3%. In Asia, Japan’s Nikkei 225 added 0.4%, while the Shanghai Composite Index contracted almost 1%.
Corrections & Amplifications
The 10-year Treasury yield settled at 1.566% on Friday. An earlier version of this article incorrectly said the closing yield was 1.590%. (Corrected on April 26)
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