US Markets

S&P 500 rises, moves closer to record high on trade and earnings optimism

Matrix's David Katz on identifying attractive opportunities even amid potentially negative headlines

Stocks closed higher on Monday, boosted by optimism around U.S.-China trade talks as well as the corporate earnings season.

The S&P 500 rose 0.7% to 3,006.72, notching its first close above 3,000 since Sept. 18.The Nasdaq Composite climbed 0.9% to 8,162.99. The Dow Jones Industrial Average advanced 57.44 points, or 0.2% to 26,827.64.

The S&P 500 could reach this week an all-time high set in July. The broad index is just 0.7% from hitting 3,027.98, the record from July 26.

"Every time we seem to get close to that level, we get knocked back down," said Arian Vojdani, investment strategist at MV Financial. "As long as we don't have too much interference from geopolitical, top-line news I think we could see the market push past that resistance level."

Apple shares led the Dow higher, rising more than 1.5% to a record high after an analyst at Raymond James hiked his price target on the tech giant to $280 per share from $250. Those gains offset a 3.8% drop in Boeing's stock. 

Chinese Vice Premier Liu He said over the weekend Beijing would work with the U.S. to address one another's trade concerns. He also said both sides have made "substantial progress" on trade. China's chief negotiator in the trade talks also said that stopping the trade war would be good for both countries — as well as the global economy.

Traders work on the floor of the New York Stock Exchange (NYSE) on May 03, 2019 in New York City.
Spencer Platt | Getty Images

His comments came after President Donald Trump said Oct. 11 that China and the U.S. had reached a phase one of a bilateral trade agreement. Trump has also said he hopes a trade deal between the U.S. and China will be signed by the time the Asia-Pacific Economic Cooperation meeting takes place in Chile in mid-November.

"A credible and sizable positive trade announcement could expedite a turn for the better, although there is no sign of such an outcome," strategists at MRB Partners wrote in a note. "There is considerable uncertainty on many fronts, including weak global trade and manufacturing activity, a generally protectionist trade backdrop, and many domestic and international political hotspots."

Investors were also focused on the corporate earnings season, with more than 120 S&P 500 companies on deck to report. McDonald's, Ford Motor, Boeing and Caterpillar are among the companies set to release their results.

The earnings season got off to a strong start as companies such as J.P. Morgan Chase, Bank of America, Netflix and Citigroup posted better-than-expected results. To be sure, companies are beating muted estimates. Analysts polled by FactSet expect overall S&P 500 earnings for the third quarter to have fallen by 4.7%.

Nicholas Colas, co-founder of DataTrek Research, is not sold on the early reporters' beat rate either.

"Q3 earnings season so far is not as strong as the headlines indicate," Colas said in a note to clients. "Yes, Q3 earnings reports have been good thus far ... But the amounts of these 'beats' on the bottom line are smaller than usual, even as revenues are actually better than expected."

—CNBC's Sam Meredith contributed to this report.