U.S. stocks closed at all-time highs Monday as Bank of America's quarterly results helped investor confidence going into earnings season.
The Dow Jones industrial average ended about 15 points higher, with Goldman Sachs and Home Depot contributing the most gains. The blue-chips index extended its winning streak to seven days, with a fifth straight day of record closes.
The S&P 500 also ended up about a quarter of a percent at a record high, led by information technology and consumer discretionary sectors.
"It will be more positive surprises than negative ones, and my guess is that guidance will give people a sense that we're through the worst," said John Manley, chief equity strategist at Wells Fargo Funds, adding that the three-week equity rally is likely to "stick around" if earnings continue to surprise.
Second-quarter earnings kick into full gear this week.
Bank of America beat Street expectations on earnings and revenue Monday, with earnings per share of 36 cents versus an expected 33 cents, according to a consensus estimate from Thomson Reuters.
Hasbro also beat consensus estimates, and Netflix reported better-than-expected earnings after the bell, but subscriber numbers missed the company's own guidance. IBM beat analysts expectations with earnings per share of $2.95 versus consensus estimates of $2.89, according to Thomson Reuters.
"Earnings expectations were so low that there was no place else to go," said Bruce Bittles, chief investment strategist at R.W. Baird. Equity markets are likely to continue a rally as global monetary easing continues, he said.
"With record low interest rates, there's no competition for stocks," Bittles said. "The money has to go somewhere." The strongest sectors, he said, have been those with high dividend yields, like consumer staples and telecom.
The energy sector was the biggest drag on the S&P as rising crude stockpiles fueled investor fear that another glut could be building, Reuters reported.
In deal news, Japan's Softbank announced an all-cash offer for chip designer ARM. The acquisition marks the biggest takeover of a British company since June's Brexit vote.
"Coming into today's market with the M&A announcement helps the risk-on tone," said Quincy Krosby, market strategist at Prudential Financial. "That's a positive underpinning for the markets."
The Market Vectors Semiconductor ETF closed 2.9 percent higher after the deal, hitting an all-time high back to 2011. This was the ETF's eighth positive day in nine and its best day since May 20.
The pan-European STOXX 600 closed slightly higher, helped by Softbank's ARM acquisition. London-listed shares of ARM jumped more than 40 percent after the announcement Monday. The U.K.'s FTSE 100 was also helped by the deal, and closed at an 11-month high, according to Reuters.