U.S. Equities Add to Records as Financial Shares Lead Advance

BAML Strategist Goes 'Big Picture Bullish' on S&P 500

U.S. stocks climbed, following fresh record highs for benchmark indexes on Friday, as banks rallied and investors continued to assess corporate earnings that are posting the best growth since 2014.

The S&P 500 Index rose 0.5 percent to 2,328.25, the Dow Jones Industrial Average jumped 0.7 percent to 20,412.16. Small-cap companies gained 0.3 percent as the Nasdaq Composite Index climbed 0.5 percent for the sixth advance in seven sessions.

  • Every industry except phone shares gained on the day
  • Financial stocks in the S&P 500 led the market higher, rising 1.1%, as all but three stocks in the 63-member index moved higher
  • Telecom shares fell 1.3%; 10-year Treasury yield up almost 3 bps to 2.43%
  • With 358 members of the S&P 500 reporting earnings, 72% have shown earnings growth; final numbers will show market-cap weighted earnings in the fourth-quarter rose 10% from a year ago, according to data compiled by Bloomberg 
  • The sharp rally in U.S. stocks over the past three months has propelled valuations to levels not seen since 2004, with the S&P 500 now trading at three times book value
  • VIX up 2% to 11.1
  • According to a Bank of America-Merrill Lynch analysis of 4,000 large long-only funds managing $12 trillion in assets, the funds added “a whopping” $45 billion in exposure to equities versus the benchmark in January
    • The funds remain underweight equities overall, and cyclical sectors, Bank of America-Merrill Lynch strategists wrote in a note
  • The Stoxx Europe 600 Index closed 0.8% higher, with the mining sector hitting its highest level since 2014 as metals prices climbed for a second day
  • EARNINGS:
    • After-market Monday: Noble Energy (NBL), Federal Realty Investment Trust (FRT), Vornado Realty Trust (VNO), Multi Packaging Solutions International (MPSX), Rent-A-Center (RCII), Brookdale Senior Living (BKD)
    • Pre-market Tuesday: Martin Marietta Materials (MLM), MoneyGram (MGI), Discovery Communications (DISCA), Incyte (INCY), FLIR Systems (FLIR), T-Mobile US (TMUS), Dr Pepper Snapple Group (DPS), Molson Coors Brewing (TAP)

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