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Market Snapshot: Dow trades higher Monday as investors bid on financials, tech, energy ahead of earnings

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U.S. stock indexes were seeing modest gains early Monday, as traders wagered on financials, energy and technology shares in the aftermath of a jobs report at the end of last week that showed weaker-than-forecast employment growth ahead of the release of third-quarter earnings.

The Treasury market is closed in observance of the Columbus Day holiday but other markets remain open as usual.

What are major indexes doing?
  • The Dow Jones Industrial Average
    DJIA,
    -0.20%

    gained 73 points, or 0.2%, to trade 34,820.
  • The S&P 500
    SPX,
    -0.22%

    advanced 7 points, or 0.2%, to 4,398.
  • The Nasdaq Composite
    COMP,
    -0.09%

    rose 44 points, or 0.3%, to 14,623.

Stocks wobbled on Friday, but logged weekly gains. The Dow advanced 1.2% last week, while the S&P 500 rose 0.8% and the Nasdaq Composite eked out a 0.1% rise.

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What’s driving the market?

The path of least resistance was higher to start the week of trading, following a lackluster employment report on Friday.

Strategists were still dissecting the report that on Friday showed that 194,000 nonfarm jobs added in September.

“Coming off the less than stellar jobs report on Friday, the market may be searching for some certainty on which way to move,” wrote Chris Larkin, managing director at E-Trade Financial, in a daily note.

“There are a lot of headwinds out there as we embark on corporate earnings, and traders will be looking for any and all indications of guidance—especially as the threat of slower growth looms large,” Larkin wrote.  

In One Chart: The 2021 stock-market highs are ‘almost certainly’ in, unless earnings clear this bar

Analysts have expressed concern that supply-chain issues that have spread throughout the global economy will compress profit margins, and that inflation will limit consumer demand.

The yield on the benchmark 10-year Treasury
TMUBMUSD10Y,
1.612%

rose 14 basis points last week to 1.60%, the biggest weekly gain since Feb. 19. The rise in yields for bonds suggest that, at least, fixed-income investors are anticipating that the Fed will reduce its monthly purchases of $120 billion in Treasurys and mortgage-backed securities.

“Friday’s U.S. employment report was sufficiently mixed to revive the debate over whether the Fed will really go ahead with the planned tapering next month. Despite the headline miss, the underlying numbers should just about meet Chair [Jerome] Powell’s requirement of ‘decent’ and ensure that the existing schedule remains intact,” said Ian Williams, strategist at U.K. broker Peel Hunt.

He added that the third-quarter earnings season will be even more crucial in supporting valuations as yields rise. Major U.S. banks including JPMorgan Chase
JPM,
-1.60%
,
Bank of America
BAC,
-0.68%

and Citigroup
C,
-0.21%

are due to report results this week.

Earnings Watch: The biggest risk facing investors this earnings season is lurking just beneath the surface

On the public-health side, Merck & Co.
MRK,
-0.61%

submitted an application to the U.S. Food and Drug Administration for emergency authorization of what would be the first pill-based treatment for the deadly illness after the company said data from a Phase 3 trial of the treatment, molnupiravir, the oral antiviral medicine, reduced the risk of hospitalization or death in adults at risk from severe COVID-19 by 50%. 

Read: How stock-market investors can make sense of supply-chain chaos

Which companies are in focus?
  • Shares of Southwest Airlines Co.
    LUV,
    -3.12%

    fell 2.4% on Monday, as the airline canceled hundreds of flights over the weekend, a move it blamed on weather and air-traffic control issues.
  • Domino’s Pizza Inc.
    DPZ,
    +0.50%

    announced the launch of Oven-Baked Dips on Monday, a side that’s meant to be eaten with the company’s Bread Twists.
  • Starbucks Corp.
    SBUX,
    +0.10%

     was upgraded to buy from hold at Deutsche Bank, with analysts anticipating growth in China for a long time to come. 
  • KKR & Co. Inc. KKR on Monday named Joe Bae and Scott Nuttall as co-CEOs of the 45-year-old private-equity firm, effective immediately. Founders Henry Kravis and George Roberts will remain involved with the firm as executive co-chairmen.
  • ExxonMobil XOM said Monday it will build its first large-scale plastic waste recycling facility in Baytown, Texas, to go into operation at the end of 2022. 
What are other markets doing?
  • The ICE U.S. Dollar Index
    DXY,
    +0.25%
    ,
    a measure of the currency against a basket of six major rivals, rose 0.1%.
  • Oil futures continued to surge, with the U.S. benchmark
    CL00,
    +2.23%

    up 2.2% at $81.08 a barrel, on track for its first finish above $80 since October 2014. Gold futures
    GC00,
    -0.11%

    edged up 0.1%.
  • The Stoxx Europe 600
    SXXP,
    +0.05%

    closed less than 0.1% higher, while London’s FTSE 100
    UKX,
    +0.72%

    finished 0.7% higher.
  • The Shanghai Composite
    SHCOMP,
    -0.01%

    ended fractionally lower, while the Hang Seng Index
    HSI,
    +1.96%

    rose 2% in Hong Kong and Japan’s Nikkei 225
    NIK,
    +1.60%

    gained 1.6%.

: Millions of people earning higher minimum wages can probably thank new Nobel Prize winner David Card

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