The S&P 500 rose Monday as traders combed through the latest batch of corporate earnings results, searching for clues on the health of corporate America.
"There is a tug of war between those who are feeling optimistic that the Fed will soon be ending the rate tightening program because of softness that we're seeing in the economy ... with those who believe the Fed will be forced to raise rates longer because the economy is not in a sense, surrendering," said Sam Stovall, chief investment strategist at CFRA Research.
Earnings season pressed on with results from State Street and Charles Schwab before the bell. Schwab shares, which have come under pressure amid fears that the brokerage firm may suffer a similar fate to Silicon Valley Bank, rose 3.9% on a profit beat despite a decline in deposits. State Street fell 9.2% after missing estimates on the top and bottom lines.
Wall Street is closely monitoring the health of financial names this earnings period after Silicon Valley Bank's collapse last month spurred a liquidity crisis and rocked the broader sector.
Elsewhere, the S&P's communication services sector slumped 1.3%, led to the downside by declines from tech giants Alphabet, Netflix and Meta Platforms. The Google parent company fell more than 2% as The New York Times reported that Samsung is weighing making Bing its default search engine.
Corporate earnings got off to a positive start last week as banking giants Wells Fargo and JPMorgan Chase beat expectations. The findings seemed to suggest that these behemoths are holding up against mounting recession fears.
As companies grapple with sticky inflation and higher rates, many investors have braced for a downbeat earnings season, but data from Bank of America suggests that companies so far are hanging on. Of the names that reported during week one, 90% topped EPS estimates. That's the best beat rate to start earnings season since at least 2012, the bank said.
Despite signs of strength, Stovall cautions drawing overall conclusions as Wall Street awaits reports from areas expected to see double-digit year-over-year declines, including health care and communication services.
"'It's sort of a wait and see because what the banks giveth, the rest of the market might taketh away," he said.
The reporting period for financial companies presses on this week with results from Bank of America, Goldman Sachs and Morgan Stanley. Outside of financials, reports from electric vehicle heavyweight Tesla, IBM and Netflix are also due out.
Stocks finish higher, Dow adds about 100 points
S&P 500 typically outperforms in week following tax deadline, data shows
If history repeats itself, the S&P 500 should outperform later this week and early next week.
The broad index has seen a median advance of 0.83% in the week's worth of trading days following the tax deadline, according to a Bespoke Investment Group analysis of the past 25 years. This year's deadline is Tuesday.
Of the past 25 years, the S&P 500 has traded positively in 76% of the five-day periods following the deadline.
That's better than a typical one-week period for the broad index over the past quarter-century. In any one-week period over the same timeframe, the S&P 500 posted a median gain of 0.31%. And the index finished those periods in the green just 57% of the time.
— Alex Harring
UBS says Okta shares could gain up to 35%
UBS says Okta's "compelling mix of growth and improving profitability" is currently underappreciated by investors.
The bank initiated coverage on Okta with a buy rating and a price target of $100, which implies 35% upside from Friday's closing price. Shares of Okta are up 13% year to date, slightly outperforming the S&P 500′s 8% gain. However, the workforce identity software company's stock has dropped more than 48% over the past 12 months.
"While Okta stumbled in CY22, 10+ conversations over the past 2 quarters suggest execution is improving and platform direction is resonating," analyst Roger Boyd wrote in a Sunday note.
Shares gained 3.9% on Monday.
CNBC Pro subscribers can read more about his upgrade here.
— Hakyung Kim
Money markets see third-best month ever in March
Investors poured money into money market funds during March as tumult in the banking industry was a boon to safe-haven instruments.
For the month, the asset class pulled in $363 billion, the third-highest ever in Morningstar data that goes back to 1993. The surge was bested only by the early days of the Covid crisis. The move pushed the total assets for the group to $5.2 trillion by the end of the month, according to the Investment Company Institute.
The banking troubles caused some substantial reshuffling in money across categories.
Looking to snap up oversold bank stocks, investors pushed $1.2 billion into the $3 trillion SPDR S&P Regional Banking ETF. Overall, though, U.S. equity funds saw outflows of $16.5 billion, the fifth straight month of negative flows.
— Jeff Cox
Mike Wilson warns 'we are far from out of the woods'
Count Morgan Stanley's Mike Wilson among the Wall Street pros who are skeptical of the strong start to the year for the stock market.
The strategist pointed to the small group of leadership in the market as one reason to believe that the S&P 500 is poised for a pullback.
"We think the recent collapse in breadth is the market's way of warning us we are far from out of the woods with this bear market," Wilson wrote in a note to clients on Monday.
— Jesse Pound
Financial stocks paint mixed picture as earnings roll in
Shares of Bank of New York Mellon dropped 5.7% ahead of the company's quarterly earnings report on Tuesday. The bank stock is leading the S&P 500's top decliners on Monday along with State Street, which was down 10.4% after its first-quarter earnings fell short of expectations, and Moderna.
"Because bank multiples are down so much, a lot of these banks are trading at March 2020 levels, so think peak-pandemic," CFRA Research analyst Alexander Yokum said Monday on "Squawk on the Street." "For banks that do not see a hit to profitability, for banks that do not see significant deposit outflows, especially those regionals, they could really pop on earnings."
Shares of Charles Schwab and M&T Bank were recently trading higher after positive earnings reports. Charles Schwab added 2.3% after topping analysts' expectations on profit, despite also reporting a 30% decline in deposits from a year ago, while M&T Bank jumped 6.5% after beating first-quarter estimates on the top and bottom lines.
— Pia Singh
Moderna shares fall despite encouraging cancer trial results
Shares of Moderna tumbled more than 7% Monday even after the pharmaceutical company shared encouraging results over the weekend from a trial of its experimental cancer vaccine in conjunction with Merck.
Moderna's mRNA vaccine helped cut the risk of death or recurrence of deadly skin cancer melanoma by 44% when combined with Merck's Keytruda immunotherapy.
Despite the promising results, some analysts raised caution and some doubt over the treatment's approval path.
Merck shares traded flat.
— Samantha Subin, Annika Kim Constantino
Stocks making the biggest moves in midday trading
Check out the companies making headlines in midday trading on Monday:
Enphase Energy, First Solar, SolarEdge Technologies – Solar energy stocks climbed across the board, with Enphase leading the charge with a 7.2% gain, while First Solar and SolarEdge added 5.4% and 4.3% respectively. Piper Sandler upgraded Enphase Energy earlier on Monday from neutral to overweight, citing possible 40% top line growth this year.
State Street, M&T Bank – Shares of State Street dropped 11% after the company posted disappointing earnings and revenue. State Street posted earnings of $1.52 per share on revenue of $3.10 billion, while analysts called for per-share earnings of $1.64 and revenue of $3.12 billion, according to Refinitiv. Meanwhile, M&T Bank shares popped 5% higher after the bank reported beats on the top and bottom lines. Bank of New York Mellon, set to post results on Tuesday, slipped 5%.
Alphabet – Shares of the Google parent slid 3% after The New York Times reported that Samsung is considering ditching Google as the default search engine on its smartphones in favor of Microsoft's Bing. The report, citing internal messages, said Alphabet was spooked upon learning about the discussions in March, and that about $3 billion in annual revenue is at stake.
Read the full list here.
— Brian Evans
Fundstrat's Lee says market beginning to 'feel like a bull market' as percent of up days hits highest since November 2021
It's beginning to "feel like a bull market," as stocks push higher and the number of up days hits the highest percent in over a year, according to Fundstrat Global Advisors' Tom Lee.
Stocks are up 65% of the last 20 trading sessions, marking the highest percent since November 2021, the head of research wrote in a Monday note. It also marks a significant improvement over the period between December 2021 and March 2023, when the figure never punched above 60%.
Broken down by sector, healthcare's seen the greatest percent of up days, followed by utilities, basic materials and industrials, Lee said.
And this uptrend isn't done just yet. Looking ahead, the analyst expects the ratio of up days to hit 70% over the next few weeks, driven by first-quarter earnings per share expectations that surpass estimates.
These results should "bolster confidence that EPS estimates are finally bottoming," he said, adding that he expects an EPS trough by the second half of this year, which would support "strengthening breadth."
Piper Sandler upgrades Biogen shares to overweight
Biogen shares rose 1% Monday after Piper Sandler upgraded the stock to overweight from neutral.
The firm said several positive catalysts are in sight for Biogen over the next several quarters. Analyst Christopher Raymond upgraded Biogen to overweight from neutral. He also raised his price target to $346 per share from $280 per share. The new target implies upside of 20.3% from Friday's close.
The firm named the foremost catalyst for Biogen as Alzheimer's treatment Leqembi, which it co-developed with Japanese pharmaceutical company Eisai. Leqembi is awaiting full approval from the Food and Drug Administration by July 6. The Centers for Medicare and Medicaid Services announced earlier in the year that it would provide broader coverage of Leqembi following the FDA approval.
CNBC Pro subscribers can read more about the upgrade here.
— Hakyung Kim
Biotech ETFs diverge as Prometheus surges
Merck's deal to purchase Prometheus Biosciences has sent the small biotech stock surging 69%, and made winners of a few biotech ETFs while leaving some large funds lagging behind.
For example, the SPDR S&P Biotech ETF (XBI) is up more than 4%. The fund had a weight of just under 1% in Prometheus as of Friday's close.
Meanwhile, Prometheus was the largest stock in the ALPS Medical Breakthroughs ETF (SBIO). That fund was up 7%.
However, iShares Biotechnology ETF (IBB) had a smaller weight in Prometheus and is up less than 1% for the day. The First Trust NYSE Arca Biotechnology Index Fund (FBT) and the