MARKET SNAPSHOT: Dow Set For First Close Above Key Level In More Than A Month As Stocks Rally

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04/16/2018 | 07:02 pm

By Barbara Kollmeyer, MarketWatch , Ryan Vlastelica

U.S. stocks rallied on Monday, with major indexes gaining about 1% as optimism persisted over the first-quarter earnings season and as geopolitical tensions showed signs of fading.

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What are the main benchmarks doing?

The Dow Jones Industrial Average rose 243 points, or 1%, to 24,603. The blue-chip average climbed above its 50-day moving average , a level it hasn't breached since March 13, and which it hasn't closed above since March 9. The level is a closely watched gauge of short-term momentum, and closing above it could suggest a corner has been turned in terms of sentiment.

The S&P 500 index added 25 points to 2,682, a rise of 1%. While the benchmark index remained a few points below its own 50-day moving average, it returned to positive territory for the year and was set for its highest close since March 22.

The Nasdaq Composite Index rose 59 points, or 0.8%, to 7,166.

Gains were broad-based, with all 11 primary S&P 500 sectors higher on the day and eight of them rising at least 1%. The Cboe Volatility Index fell 5% and was on track for its lowest close in about a month .

What's driving markets

Corporate earnings are likely to be driving markets. A number of bellwether names, including Netflix and General Electric, are scheduled to report in the coming days, joining Bank of America, which reported early Monday.

According to FactSet, earnings for companies in the S&P 500 are expected to grow 17.3% in the first quarter , while sales grow 10%. For both, such rates would represent the fastest pace of growth since the first quarter of 2011.

Which stocks are in focus?

Bank of America rose 0.6% after beating profit and revenue expectations . The results follow JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Wells Fargo & Co. (WFC), all of which lost ground Friday even after posting earnings that were either in line with forecasts or better than expected. Some say that could be due to concerns that earnings growth has peaked .

The financial sector rose 0.8% on Monday.

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Merck & Co.(MRK) gained 2.4% after it released late-stage results showing that a cancer drug combination using its Keytruda reduced patients' risk of death by half, a significant improvement. The stock was one of the biggest boosts to the Dow .

U.S.-listed shares of WPP fell 5.4% after Chief Executive Officer Martin Sorrell resigned over a probe into an allegation of personal misconduct .

Icahn Enterprises L.P.(IEP) rose 0.8% after announcing its majority-owned Tropicana Entertainment Inc. had entered a deal to sell its real estate to Gaming and Leisure Properties for $1.85 billion. It will also merge its gaming and hotel business into Eldorado Resorts. Shares of Eldorado jumped 6%.

Alkermes PLC jumped 4.3% after the Food and Drug Administration accepted the biopharmaceutical firm's new drug application for its treatment for depression.

MoviePass majority owner Helios & Matheson Analytics Inc.(HMNY) rallied 3% in premarket trading, extending a gain that started after Verizon Communicationsdisclosed a large equity stake in the company .

Navistar International Corp rose 11% after Volkswagen AG's commercial-vehicles business said it is considering increasing its stake in the U.S. truck company to more than 17%.

NewLink Genetics Corp tumbled 7.8% after the company said it won't proceed as planned with a late-stage trial of its indoximod drug for advanced melanoma.

What are analysts saying?

"Investors already know that earning will be good and at this point looking at guidance from companies. The next couple of weeks will be important because many companies from different sectors will report," said Quincy Krosby, chief market strategist, at Prudential Financial.

Krosby said that markets will remain volatile intraday on the days there is political news.

"Today we have Michael Cohen [Trump's personal lawyer] appearing in court and would not be surprised to see some volatility because of that," Krosby said.

"With trade headlines dying down, for now, the market still closer to the lower end of our target valuation range, and likely continued earnings momentum ahead, we remain tactically bullish," wrote Michael Wilson, chief U.S. equity strategist at Morgan Stanley. "We think first-quarter earnings season should deliver on high expectations and help the market move higher toward a cyclical top in equities we expect to occur later this year."

What is on the economic docket?

Sales at U.S. retailers rose 0.6% in March to end a streak of three straight declines, the Commerce Department reported Monday, underscoring the improved financial picture of American households and the resiliency of an economic expansion that could turn out to be the longest ever.

Separately, the Empire State manufacturing index gave up most of the gains in April that it saw in the prior month, the New York Fed said Monday. The index slipped to a reading of 15.8 in April from 22.5 in March.

Meanwhile, President Donald Trump is set to announce Monday two nominees to the Federal Reserve, The Wall Street Journal reported (, citing White House officials. He'll nominate Richard Clarida as vice chairman, and Michelle Bowman to fill the spot reserved for a community banker or regulator of community banks.

What are other markets doing?

Asian markets surrendered much of an early lead , led by falls for China and Hong Kong. European stocks edged lower.

Gold futures inched higher , while the ICE U.S. Dollar Index lost ground . Oil prices pulled back as Syria worries eased somewhat and investors cashed in on some of last week's big gains.

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