U.S. stocks rallied to begin May, with the S&P 500 rising the most in more than two weeks, as banks rebounded and Amazon.com Inc. jumped for a second day to boost consumer shares.
Amazon increased 3.7 percent to a four-month high, after its biggest one-day gain in nine months on Friday followed better-than-estimated earnings. Wells Fargo & Co. and Bank of America Corp. climbed at least 1.2 percent. Halliburton Co. added 1.8 percent and Baker Hughes Inc. fell 2 percent after ditching their $28 billion merger. Energy producers edged higher despite lower oil prices, and Apple Inc. extended its longest losing streak since 1998.
The S&P 500 rose 0.8 percent to 2,081.43 at 4 p.m. in New York, recovering more than half of its biggest weekly retreat since February. The Dow Jones Industrial Average added 117.52 points, or 0.7 percent, to 17,891.16. The Nasdaq Composite Index increased 0.9 percent. About 7 billion shares traded hands on U.S. exchanges, 10 percent below the three-month average.
“We can hold the strength we’re seeing, but there’s still a lack of conviction in the market,” said Bill Schultz, who oversees $1.2 billion as chief investment officer at McQueen, Ball & Associates Inc. in Bethlehem, Pennsylvania. “Earnings have been spotty at best, and outlooks have given investors some pause about the future. At the same time, there are no signs pointing to a dramatic pullback. There’s some consolidation going on at these levels.”
More than halfway through the earnings season, corporate results so far haven’t convinced investors that profits will rebound from what’s shaping up to be a fourth straight quarterly decline. Better-than-forecast results from banks, thanks in large measure to cost cuts, helped send the S&P 500 to a four-month high before disappointing reports from tech heavyweights Apple, Google parent Alphabet Inc. and Microsoft Corp. dragged stocks lower last week.
Analysts estimate tech earnings will fall 6.1 percent in the second quarter, after predictions when the year started that they would rise 6.4 percent. Forecasts call for the group’s profits to climb 2.5 percent in the third quarter, down from 10.7 percent as 2016 began, according to data compiled by Bloomberg.
The S&P 500 fell in four of the year’s first six weeks, losing 11 percent as oil plunged and concern mounted about bank earnings. In the 2 1/2 months since, the index is up in eight of 11 weeks amid crude’s recovery, signs of China’s slowdown stabilizing and assurances from central bankers that they will do what’s necessary to bolster growth. The benchmark is up 1.8 percent in 2016.
More than 115 of S&P 500 companies, including Pfizer Inc., Priceline Group Inc. and Whole Foods Market Inc. are scheduled to report earnings this week. Of those that have released results this season, 77 percent beat profit projections and 58 percent topped sales estimates. Analysts expect an 8.2 percent decline in first-quarter profit for firms in the gauge.
Investors are closely watching economic releases after the Federal Reserve kept its benchmark rate unchanged last week. A report today showed manufacturing expanded at a slower pace than forecast in April as factories continued to grapple with lax global demand and fallout from a weakened U.S. energy industry.
Data on employment, growth in services industries and factory orders are also due later this week. Traders are now pricing in an almost 60 percent chance of higher borrowing costs in December, the first month with more than even odds for a boost.
“We had a big rally since February,” said Otto Waser, chief investment officer of R&A Group Research & Asset Management in Zurich. “Investors are waiting for something that could finally tilt the market one way or the other and that’s either earnings or economic data.”
In Monday’s trading, all of the S&P 500’s 10 main industries gained, as consumer discretionary, financial and consumer staples companies rose at least 1 percent. Energy companies were little changed despite crude’s retreat.
The CBOE Volatility Index decreased 6.5 percent to 14.68, falling back from a three-week high reached on Friday. The measure of market turbulence known as the VIX rose 13 percent in April, the biggest monthly gain of 2016.
Consumer discretionary companies in the S&P 500 increased 1.4 percent, the steepest in seven weeks, with Amazon’s gains contributing the most to the climb. The e-commerce giant has increased nearly 14 percent in two sessions after reporting quarterly sales and profit that exceeded analysts’ expectations. Home Depot Inc. added 1.6 percent. Wynn Resorts Ltd. rose 6.8 percent. Gross gaming revenue in Macau declined less than forecast in April.
Dick’s Sporting Goods Inc. jumped 3.3 percent after Deutsche Bank AG predicted the company will be the biggest beneficiary of Sports Authority Inc.’s bankruptcy. As Sports Authority moves toward shutting down stores, Dick’s is poised to pick up much of the bankrupt chain’s $2.6 billion in sales, Deutsche Bank analyst Mike Baker said in a report.
Procter & Gamble Co. increased 1.1 percent, while Mondelez International Inc. and Colgate-Palmolive Co. advanced more than 2 percent to boost consumer staples. The group fell 1.5 percent last month, the most since August, after reaching a record on April 1. Sysco Corp., the largest North American food-service distributor, climbed 5.5 percent Monday to a record after reporting profit and revenue that exceeded consensus analyst estimates.
Netflix Inc. advanced 3.4 percent to snap a five-session slide, the longest in three months. The online video service fell 12 percent in April, its worst since a nearly 20 percent tumble in January. The shares are still down almost 19 percent this year.
The S&P 500 Financials Index rose 1.1 percent, led by a 3.2 percent surge in Public Storage. E*Trade Financial Inc. increased 2.1 percent, while an index of bank stocks climbed 0.9 percent after dropping 2.1 percent in the prior two sessions. Capital One Financial Corp. and KeyCorp gained at least 1.3 percent.
Microsoft rose for the first time in five days and Alphabet gained 0.9 percent, the most in two weeks. Visa Inc. advanced 1.6 percent as tech companies halted a seven-day skid, the longest since Jan. 8.
Despite a 2.5 percent slide in crude, energy producers were little changed after falling as much as 1.1 percent. Halliburton rose to its highest since August 12, and Diamond Offshore Drilling Inc. added 1.2 percent as its quarterly revenue beat estimates. Meanwhile, Southwestern Energy Co. fell 4.7 percent, while Helmerich & Payne Inc. lost 4.6 percent after posting a wider-than-forecast quarterly loss. Oil dropped for a second day as Iraq’s exports approached a record high in April.