U.S. stocks closed higher on Monday, following positive momentum from Europe, as investors looked to Federal Reserve speeches and economic data for signals on the timing of a rate hike.
“The first quarter is behind us, whether it’s earnings or data,” said Art Hogan, chief market strategist at Wunderlich Securities, noting several economic reports for April expected in the next few days. “It’s all about the data that’s fresh and forward-looking.”
The S&P 500 ended higher but failed to hold above its closing high of 2,117.69, with financials the greatest advancer. Led by JPMorgan Chase, the Dow Jones industrial average traded about 50 points higher after briefly adding 100 points. The blue chip index held above 18,000, about one percent away from its closing high.
The U.S. 10-year Treasury yield gained to trade near 2.14 percent. The U.S. dollar edged higher, with the euro slightly lower near $1.11.
The Nasdaq Composite traded above 5,000, with the iShares Nasdaq Biotechnology ETF (IBB) gaining briefly gaining more than 1.5 percent as the fund tried to stay above its 50-day moving average.
“The focus this week is really on Friday’s jobs report. Expectations are for a snapback in the second quarter,” said Mark Luschini, chief investment officer at Janney Montgomery Scott.
“Any information we’ve had is good but not strong enough for the Fed to raise interest rates too soon,” he said.
Ahead of Friday’s important jobs report for the month of April, factory orders for March showed a gain of 2.1 percent, the biggest increase in eight months and above expectations of a 1.9 percent increase. However, the underlying trend remained weak against the backdrop of a strong dollar.
“I think stocks are taking their cue from Comcast (earnings) and factory orders,” said Alan Skrainka, chief investment officer at Cornerstone Wealth Management. “The market is starting the week off on a positive note. No (major) news overseas.”
The first of several central bank policymakers to speak this week, Chicago Fed’s Charles Evans said that hiking interest rates does not seem appropriate until next year due to the weak first quarter. His address came at the annual meeting of the Columbus Economic Development Board.
At a separate event on job creation, San Francisco Fed President, John Williams, said some Americans were left behind in the U.S. economic recovery, which treated some better than others.
“It’s a market that still expects the Fed to push out the timing of the liftoff,” said Quincy Krosby, market strategist at Prudential Financial. “It’s a day when we had a rocky week last week. The markets overnight in the euro zone were up as well. We had positive momentum from there.”
Asian and European shares closed higher on Monday, although U.K. and Japanese stock markets were closed for local holidays. Markets were boosted after tepid manufacturing data from China raised hopes that Beijing would unveil further stimulus measures to boost the economy.
“The market is moving up on momentum buying due to liquidity that’s being added to global markets,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
Analysts also noted market optimism on potential for mergers and acquisitions. Most recently, seed company Monsanto made an offer to buy Switzerland’s Syngenta, Bloomberg reported last week, citing sources.
“It seems like people are starting to focus on the acquisition piece of things,” said Maris Ogg, president at Tower Bridge Advisors. While she would prefer to see more capital expenditure, she said the market seems to be shaking off any softness in earnings.
“The worst seems to be over… and the market seems to be taking mediocre news in stride,” she said. “My guess would be maybe the impact of the dollar and lower energy prices is not as bad as people thought.”
Reporting before the bell, Comcast, the NBCUniversal parent earned 81 cents per share for the first quarter, seven cents above estimates, with revenue also above forecasts. Comcast also added $2.5 billion to its existing stock buyback program.
Sysco, the no. 1 U.S. food distributor, reported a 2 percent fall in quarterly profit, hurt by a rise in meat and poultry prices, a strong dollar and higher expenses.
McDonald’s was also in focus, with the fast-food giant announcingplans to accelerate refranchising and divide its structure into four parts. Following the news, S&P downgraded the stock to “A-“ from “A” while retaining a stable outlook.
Macerich briefly gained more than 2 percent on a Wall Street Journalreport that said the shopping mall operator settled a proxy fight with two activist hedge funds. The activists had criticized the firm for rejecting Simon Property‘s takeover bid.
The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, traded near 13.
About three stocks advanced for two decliners on the New York Stock Exchange, with an exchange volume of 637 million and a composite volume of nearly 3 billion in the close.
Crude oil futures settled down 22 cents, or 0.37 percent, at $58.93 a barrel on the New York Mercantile Exchange. Gold futures settled up $12.30 to $1,186.80 an ounce.