U.S. stocks climbed on Monday, with the Dow industrials back above 17,000 and posting an intraday record, as investors welcomed better-than-projected earnings from Citigroup and a bout of corporate takeovers.
"It's really been an S&P-type dominated market; the large U.S. stocks are where most investors are finding refuge. McDonald's, Altria, IBM, are not going out of business tomorrow, and investors feel comfortable in good times and bad hanging with those companies," said Paul Nolte, senior vice president, portfolio manager at Kingsview Asset management.
URS surged after Aecom Technology said it would pay about $4 billion to purchase the construction-management company. AbbVie declined after Shire said it was ready to recommend the company's latest offer to its shareholders. Mylan said it would purchase Abbott Laboratories' specialty and branded generics business outside the U.S. in a deal valued at about $5.3 billion. Apple rose after Barclays upgraded shares of the iPhone maker to overweight from equal weight.
"This quarter, the bar has remained relatively high, so yes, if earnings are all stellar, the market can continue to plod higher. But most people including myself would look at the market and say it's fairly valued, in which case we need pretty solid earnings to continue," said Randy Frederick, managing director of active trading and derivatives at Charles Schwab.
Citigroup gained after reporting quarterly results and after agreeing to pay $7 billion to settle government claims it misled investors about mortgage-backed bonds sold ahead of the 2008 financial crisis.
"Citigroup helped the financials tremendously. They were in a funk last week. Wells Fargo put up some good numbers, and there was no benefit to it, partly because of the overhang from Europe," said Nolte, referring to concern over the financial health of one of Portugal's major banks.