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Topline

The three major stock market indexes closed at new record highs Monday as Wall Street rallied around economic growth prospects and braced for a volatile week marked by big bank earnings results kicking off Tuesday and key inflation data.

Key Facts

Adding to a Friday high, the Dow, which is composed of 30 legacy corporations like Disney and Goldman Sachs, jumped 126 points, or 0.4%, to 34,996 on Monday, pushing gains to nearly 16% this year alone.

Also nabbing new records, the S&P 500 jumped 0.4% to 4,385 points, and the tech-heavy Nasdaq ticked up 0.2%; they’re now up 18.5% and 16% this year, respectively.

Ahead of their earnings reports this week, big banks Morgan Stanley, Goldman Sachs and JPMorgan were among stocks heading up the S&P’s gains, climbing 3%, 2.5% and 2%.

Shares of Disney, meanwhile, outperformed every other stock in the Dow, climbing more than 4% after the company’s spy thriller Black Widow set a pandemic record with movie-theater earnings of $80 million and streaming earnings of $60 million over the weekend.

What To Watch For

Whether corporate earnings keep their first-quarter momentum. “We ran out of superlatives to describe corporate America’s stunning performance during first-quarter earnings season,” LPL Financial wrote in a Monday note, citing profits that exceeded high expectations by one of the biggest margins in history. The firm expects “more good news this quarter as more of the economy has opened up,” but also acknowledges the second quarter “will almost certainly end up being the peak in earnings growth for this cycle.”

Tangent

In addition to the slew of corporate earnings, the Bureau of Labor Statistics’s monthly consumer price index report is also slated for Tuesday morning. Economists project inflation, which has surged to 13-year highs during the pandemic, ticked up 0.5% in June after climbing 0.6% in May.

Key Background

Buoyed by optimism over the waning pandemic, energy and financial stocks headed up the market at the start of this year, but technology stocks have also bounced back after underperforming this spring amid the threat of rising interest rates. Those fears spurred a stock market rotation away from growth stocks (like those in tech) to cyclical and value-leaning slices of the market that struggled during the pandemic (like energy and financials). In recent weeks, however, Federal Reserve officials eased interest rate concerns by making it clear the Fed isn’t looking to raise rates anytime soon.

Further Reading

Billionaire Branson’s Virgin Galactic Files To Sell $500 Million In Stock One Day After Reaching Space (Forbes)

Amazon, Apple And S&P 500 Hit New Highs As Big Tech Stages Massive Rally (Forbes)

Stock Market Adds To Record Highs After Better-Than-Expected Unemployment Data (Forbes)