Stocks up on high hopes for corporate earnings
NEW YORK — Cautious optimism about corporate earnings sent the stock market higher on Monday.
U.S. companies will start reporting their second-quarter results this week.
Analysts predict that earnings growth for companies in the Standard & Poor's 500 index will come in at 3 percent in the second quarter. While that rate would be down from 5 percent in the first quarter, earnings still are expected to reach record levels.
Investors and traders will search for evidence that companies are increasing revenues, not just cutting costs to boost profits. Sales growth is predicted to fall 0.3 percent in the second quarter.
“We'll be looking to see where revenue comes in,” said Jim Dunigan, an executive vice president of investments at PNC.
The Dow rose 88.85 points, or 0.6 percent, to close at 15,224.69. The Standard & Poor's 500 index gained 8.57 points, or 0.5 percent, to end at 1,640.46.
The Russell 2000 index, an index of small-company stocks, closed at a high of 1,009.25. The index passed the 1,000 mark for the first time on Friday and has gained 19 percent this year, a sign that investors are more willing to take on risk. The gains have outpaced those of the Dow and S&P 500, which are up 16 percent and 15 percent, respectively.