US stock market: Wall Street equities close higher due to the expectation of significant corporate profits

US stock market: Wall Street stocks finished Monday’s trading session higher, bouncing back from earlier sell-offs as investors braced themselves for a busy week of important firms’ quarterly reports, which would provide a window into the state of the US economy.

Following a six-session decline, investors reevaluated their expectations on interest rate cuts in response to strong economic data, geopolitical tensions, persistent inflation, and remarks from Federal Reserve officials. As a result, the benchmark S&P 500 (.SPX) and the Nasdaq (.IXIC) recovered.

With technology (.SPLRCT) and financial stocks (.SPSY) driving gains, all 11 S&P 500 sectors ended the day higher. This week, the markets were anticipating the release of quarterly results from megacap firms, which included some of the so-called Magnificent Seven stocks: Microsoft (MSFT.O), Alphabet (GOOGL.O), Tesla (TSLA.O), and Meta Platforms (META.O).

“I believe it’s a typical buy-on-the-dip strategy following a five percent decline that encourages individuals to invest their money,” said Lamar Villere, portfolio manager of Villere & Co. in New Orleans.

“Investors are looking ahead to this week with hugely significant earnings coming out and with concerns about what the Fed is doing with pushing back any rate cuts,” Villere said. LSEG data shows that money markets are pricing in just around 41 basis points (bps) of rate decreases this year, compared to approximately 150 bps at the start of the year.

Markets are anticipating the publication of the March personal consumption expenditure (PCE) data, the Fed’s favored inflation measure, later this week, in addition to the best corporate profits, in order to better determine the direction of monetary policy.

Before their policy meeting on May 1, Federal Reserve officials are under a state of media blackout. The Nasdaq Composite (.IXIC) increased by 169.30 points, or 1.11 percent, to 15,451.31, while the S&P 500 (.SPX) gained 43.37 points, or 0.87 percent, to 5,010.60. At 38,239.98, the Dow Jones Industrial Average (.DJI) increased by 253.58 points, or 0.67 percent.

With gains in Alphabet, Amazon.com (AMZN.O.), and Apple (AAPL.O) ranging from 0.5% to 1.5%, megacap growth stocks concluded the day higher. NVDA.O had a 4.4% increase as it recovered from a 10% decline in the previous trading day.

Thomas Hayes, head of the New York hedge firm Great Hill Capital, said, “This is predicated on positive technical expectations on tech earnings and traders not wanting to be short in front of it, as well as the PCE numbers later this week that people are somewhat sanguine about.”

Following price reductions in the US, Tesla reduced pricing in many of its main countries, including China and Germany, which resulted in a 3.4% decline in the company’s shares.

Following news that its contracts with UnitedHealth Group’s (UNH.N.) OptumRx, one of its biggest clients, will not be extended when they expire at the end of June, Cardinal Health (CAH.N) saw a 5% decline in value.

On the NYSE, advances outweighed decliners by a ratio of 2.87 to 1. On the NYSE, there were 49 new highs and 76 new lows. On the Nasdaq, advances exceeded decliners by a ratio of 1.79 to 1, resulting in 2,682 stocks rising and 1,499 falling.

While the Nasdaq registered 40 new highs and 184 new lows, the S&P 500 recorded 9 new 52-week highs and 4 new lows. 10.33 billion shares were traded on US markets, below the 20-day average of 11.03 billion shares.