Stocks rose on Monday. It appears that investors have, at least temporarily, dismissed concerns about the growth outlook, expecting higher earnings in second-quarter corporate reports.
The S&P 500 and Nasdaq hit record intraday levels, offsetting earlier declines. The Dow Jones index also moved slightly in a positive direction.
Over the past few weeks, investors have been assessing the likelihood that the “delta” version of the coronavirus would derail the economic recovery and hold back the U.S. stock rally for the current year. These fears caused a drop last week when stocks fell the most since October. True, they then ended the week at record levels.
Some strategists are suggesting that the surge in volatility related to the virus will have a temporary effect.
This week, Federal Reserve officials are expected to make forecasts about further plans for monetary policy.
Many investors are betting that the threat of an economic slowdown caused by the “delta” version of COVID-19 will overshadow the regulator’s concerns about inflation. Central banks will remain in the same wait-and-see mode, making no changes to their asset purchase programs and keeping interest rates near zero.
Also expected this week is a busy schedule of corporate earnings reports. High-tech companies Apple, Microsoft, and Amazon, as well as several other corporations, including UPS, 3M (MMM), Starbucks, and Boeing, are expected to report second-quarter results.
The earnings reporting season so far has been especially strong, helping to keep the indices rising to new record highs even in light of recent economic troubles. Twenty-four percent of the S&P 500 have already reported second-quarter results. Of those, 88% have beaten Wall Street’s earnings estimates.
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