US close: Stocks rally ahead of earnings season

(Sharecast News) - US stocks rose strongly on Monday, with the S&P 500 having its best day in nearly two months, as bond yields largely shrugged off ongoing conflict in the Middle East, Government bonds and gold prices both declined, pulling back after investors poured into safe havens the previous session on the back of rising tensions between Israel and Hamas.

Michael Hewson, analyst at CMC Markets, said the weekend "saw a lot of noise, but little sign that an Israeli incursion into Gaza was imminent, although it still seems likely that it will happen at some point". He added: "Absent any news out of the Middle East the focus is likely to be on earnings this week."

This S&P 500 finished at 4,374, up 1.1% on the day - its best daily performance since late-August. The Dow Jones Industrial Average meanwhile gained 0.9% and the Nasdaq rose 1.2%.

Following results from banking heavyweights JPMorgan and Citigroup last week, the coming few days will see earnings from the likes of Tesla, Bank of America, Deliveroo, Goldman Sachs and Netflix.

"Last week's fears about higher inflation driving renewed Fed rate hikes seem to have dissipated, especially given the low probability of a move in November," said analyst Chris Beauchamp from IG. "Bulls will be encouraged by tech stocks taking the lead this afternoon, with the Nasdaq 100 feeling more confident ahead of Netflix's earnings later in the week."

WTI crude finished 0.8% lower at $87 a barrel after surging on Friday; US 10-year Treasury yields rose 8.2 basis points to 4.709%; while the Dollar Index slipped 0.4% to 106.20.

Pfizer rebounds strongly

Pfizer on Friday slashed its revenue guidance for the full year, citing lower-than-predicted sales of its Covid-19 vaccine. The company also said it would embark on a cost-cutting programme to save $3.5bn annually by next year, which includes layoffs. However, the stock rebounded strongly on Monday after Jefferies upgraded its stance from 'hold' to 'buy', citing an attractive buying opportunity.

Ford finished in positive territory as the auto maker's executive chair Bill Ford called for an end to the "acrimonious" negotiations with the UAW, saying the ongoing strikes are threatening the industry's future.

Chip giant Nvidia finished higher, shrugging off the Reuters report that the US government will tighten restrictions on AI chip exports to China, highlighting Nvidia's H800 as one of specific products that it wants t.block.

Microsoft gained despite the announcement that its Linkedin division is cutting 670 jobs, adding to the 700 that it had eliminated in May.