Stocks rose modestly Monday as Wall Street kicked off a busy earnings week and wrapped up a winning month.
Stocks finished July on a positive note. The S&P 500 jumped 3.1% to notch its fifth consecutive positive month for the first time since its seven-month streak ending August 2021. The tech-heavy Nasdaq Composite gained about 4.1% and registered its fifth straight winning month for the first time since April 2021.
The blue-chip Dow added about 3.4%. Last week, the index posted a 13-day advance that matched its longest streak of gains going back to 1987.
Investors in recent weeks have grown increasingly more hopeful about a soft landing scenario as economic data shows ongoing strength in the labor market and cooling inflation. Second-quarter earnings also continue to trickle in better than expected.
"Earnings coming in not as bad as feared, clearly that's a good thing for the market," said Independent Advisor Alliance's Chris Zaccarelli. "Part of the reason the market's rallied this whole month is that in addition to the good news to the economy that we've seen all year, we're also seeing that corporate earnings really seem to have not been impacted as much as people have been concerned about."
"If they give really good guidance, we could see this bull market really continue to pick up speed and even see some momentum heading into the fall," he said.
Last week, the Federal Reserve hiked rates to their highest level in more than 22 years after passing a much-anticipated quarter-point hike. Fed Chair Jerome Powell said the central bank will make data-driven decisions on a "meeting-by-meeting" basis.
Along with earnings, investors remain focused on Friday's jobs report. Economists polled by Dow Jones expect the U.S. economy to have added 200,000 jobs in July. Nonfarm payrolls increased 209,000 in June.
Correction: An earlier version of this story misstated the closing level of the Dow Jones Industrial Average.
Not enough evidence in price charts yet to justify turning cautious on stocks, MKM Roth says
"There are still plenty of extended stocks combined with euphoric sentiment and overexposure in the near term," JC O'Hara, chief technical strategist at Roth MKM wrote to clients on Sunday in a note entitled, "Bulls 'Whack-A-Mole' the Bears Again."
But, more positively for the optimists, "there is not enough technical evidence to shift the technical environment to one of caution," O'Hara said. Cracks briefly appeared in the market last Thursday after the Dow Industrials' 13-day-long rally, "but buyers were quick to return on Friday, spurred by economic data."
"The price action on Friday indicates there is still some fight left within the market bulls," Roth MKM said.
— Scott Schnipper, Michael Bloom
Stocks finish higher Monday, wrap winning month
Stocks closed higher on Monday to cap off July on a positive note.
For the month, the S&P jumped 3.1% to register its fifth consecutive positive month for the first time since its seven-month streak ending August 2021. The tech-heavy Nasdaq gained about 4.1% and the blue-chip Dow rose about 3.4%.
— Samantha Subin
Correction: An earlier version of this post misstated the closing level of the Dow Jones Industrial Average.
GE rally makes shares less attractive, Oppenheimer says
Oppenheimer moved to the sidelines on General Electric after the industrial stock's recent rally.
Analyst Christopher Glynn downgraded shares to perform from outperform. He has no target price for shares.
The downgrade comes despite the company beating Wall Street expectations for its second quarter and raising its full-year earnings outlook. Glynn raised his earnings forecast for 2023, 2024 and 2025.
That's because the stock's rally this year has brought its share price to better align with fundamentals, Glynn said, meaning it may be harder to see upside ahead. The stock has gained 36% since upgrading shares in December.
— Alex Harring
Dow members diverge in July
Dow members are on track to post vastly different performances in July with just Monday's session left in the trading month.
Less than a third of the 30 stocks in the blue-chip average are poised for monthly losses. The Dow as a whole is up more than 3% on the month.
Boeing, 3M and Goldman Sachs have led the index higher this month with gains greater than 10% each. On the other end of the spectrum, Merck & Co. and Verizon have weighed on the average, with each dropping more than 8% in July.
— Alex Harring
Verizon and AT&T slide in July following WSJ report
Verizon has lost around 8.7% since July began, making the stock poised to see its largest monthly drop since September, when it finished 9.2% lower. It's the worst performer on a month-to-date basis of the 30 stocks in the Dow.
Meanwhile, AT&T has lost 9.3% since the month began. The stock has traded at lows not seen since the early 1990s.
Investors have wondered this month if either stock is at risk of needing to pull back on their dividends.
— Alex Harring
Meme stock ETF headed toward a strong July finish
— Hakyung Kim, Gina Francolla
Jefferies downgrades Carvana, cites worry over profitability sustainability
Carvana will have trouble maintaining its profitability pace, according to Jefferies.
The firm downgraded Carvana stock on Monday, with analyst John Colantuoni warning that the company's higher profitability clip is only thanks to short-term transitory tailwinds.
"We believe GPU [gross profit per unit] is temporarily benefiting from transitory tailwinds like wider wholesale/retail spreads and the timing of loan sales, which we expect to normalize throughout 2H23," Colantuoni said. "We also envision an acceleration in Unit growth next year leading to inefficiencies that further negatively impact per unit economics."
Still, the stock was up 2% in the afternoon trading.