Stocks rose slightly on Monday as Wall Street kicked off a big week of earnings. The moves also come as expectations of aggressive policy easing from the Federal Reserve dampen.
The S&P 500 gained 0.3% to close at 2,985.03 as the tech sector outperformed. The Nasdaq Composite advanced 0.7% to 8,204.14. The Dow Jones Industrial Average climbed 17.70 points, or 0.1%, to 27,171.90 but a 1% drop in Boeing capped the index's gains.
Boeing shares fell after Fitch downgraded its outlook on the airplane maker to negative. Tech shares rose 1%, led by chipmakers. Applied Materials, Micron Technology and Lam Research rose at least 3.7% after Goldman Sachs upgraded them, noting that excess inventory for memory chip companies "will be depleted" faster than expected.
More than a quarter of the S&P 500 reports earnings this week including so-called FANG names Facebook, Google's parent Alphabet and Amazon, along with blue chips like McDonald's and Boeing. Facebook, Amazon, and Alphabet all closed higher.
"Earnings have been good so far. Companies are beating low expectations," said Ryan Nauman, market strategist at Informa Financial Intelligence. "It is great to see companies beat expectations, but my enthusiasm is a bit muted because growth is still flat to negative."
So far, more than 15% of the S&P 500 has posted quarterly results. Of those companies, 78.5% have topped analyst expectations for earnings while 67% have reported better-than-expected quarterly revenues, according to FactSet data.
"Given that companies tend to outperform expectations, we said that Q2 would actually show positive earnings growth of 1.0%. Nothing to write home about, but enough to end the earnings recession chatter," said Nicholas Colas, co-founder of DataTrek Research, in a note. "A strong dollar is the biggest headwind to earnings and profit margins – not the effect of the US-China trade war – and this problem only gets worse in Q3 2019."
Stocks struggled last week, posting their biggest weekly decline since May as investors digested the first batch of corporate earnings reports and signals on potential Fed policy moves.
Comments from New York Fed President John Williams initially led investors to price in a greater possibility of the central bank cutting rates by 50 basis points. In a speech on Thursday, Williams said it is better for central banks to take preventative measures than to wait for disaster to unfold."
However, the New York Fed later tried to walk back Williams' remarks, stating: "This was an academic speech on 20 years of research. It was not about potential policy actions at the upcoming FOMC meeting."
According to the CME Group's FedWatch tool, market expectations for a 25 basis-point rate cut later this month are at 75.5%. Meanwhile, traders are also pricing in a 24.5% chance of a 50 basis-point cut.
President Donald Trump, who has been critical of the Fed's decision to hike four times last year, suggested on Monday the Fed should cut "deeper" at its upcoming meeting July 30-31.
—CNBC's Elliot Smith contributed to this report.