Updated 4:20 PM EDT
Stocks ended on a high note Monday boosted by hopes that the Federal Reserve would cut interest rates.
The Dow Jones Industrial Average finished up 176 points, or 0.46%, to 38,852.27, while the S&P 500 gained 1.03% to 5,180.74 and the tech-heavy Nasdaq advanced 1.19% to 16,349.25.
Stocks received boost in the early afternoon on news that Hamas has accepted an Egyptian-Qatari cease-fire proposal to end the war with Israel.
Wall Street is watching key companies set to report this week, including Dow member Disney (DIS) on Tuesday and Uber (UBER) on Wednesday.
Updated at 12:17 PM EDT
Bad news is good news
Stocks continued to rise in early afternoon trading Monday, amid hopes the Fed would cut interest rates.
The Dow was up 0.8%, to 38,707.69, while the S&P 500 0.56% to 5,156.69, and the tech-heavy Nasdaq advanced 0.67% to 16,263.08.
“We remain in an environment where bad news is good news,” said Louis Navellier, Navellier & Associates founder and CEO. “Essentially, Wall Street will continue to root for bad economic news, since it wants to guilt the Fed to begin cutting key interest rates sooner than later.”
UBS Wealth Management’s head of U.S. equities, David Lefkowitz, said that he is optimistic deep into first-quarter earnings season.
“Despite the market volatility of recent weeks, the 1Q earnings season has been solid,” he wrote in a May 6 note. Earnings reports from companies representing 80% of the S&P 500 market capitalization are in, and “the share of companies beating sales and earnings estimates has been healthy — 60% for sales and 76% for earnings.”
The results “give us greater conviction in our view for 9% earnings growth for full-year 2024, with earnings growth broadening out beyond the ‘Magnificent 7’ large-cap growth companies,” he said.
“We continue to think that the backdrop for stocks remains supportive, driven by healthy and broadening profit growth, inflation that will likely resume falling, a Fed that is more likely to cut than hike rates, and surging investment in AI.”
Updated at 9:45 a.m. EDT
Coffee break
Stocks opened higher Monday after a softer-than expected April jobs report on Friday prompted hopes that inflation might ease and the Federal Reserve might cut interest rates.
The Dow Jones Industrial Average rose 179 points, or 0.46%, to 38,848.60, while the S&P 500 gained 0.44% to 5,150.21 and the tech-heavy Nasdaq advanced 0.50% to 16,236.84.
In company news, Berkshire Hathaway CEO Warren Buffett said on Saturday at the annual meeting that the company had shed its entire Paramount (PARA) stake at a loss, according to CNBC.
“I was 100% responsible for the Paramount decision,” CEO Buffett said. “It was 100% my decision, and we’ve sold it all and we lost quite a bit of money.”
Berkshire’s latest filings showed that it owned 63.3 million shares of Paramount at year-end 2023, after it had pared the holding by about a third in the fourth quarter, the news service reported.
Paramount has struggled in recent years, with revenue declining as more consumers abandon traditional pay-TV, and as its streaming services continue to lose money.
People familiar with the matter told The Wall Street Journal that private-equity giant Apollo Global Management (APO) and Sony (SONY) have proposed to acquire Paramount for $26 billion cash.
Former Starbucks (SBUX) Chairman and CEO Howard Schultz has plenty to say after the coffee-chain giant missed Wall Street's second-quarter-earnings expectations.
Schultz said in a post on LinkedIn that his love of the company and all those who wear “the cloth of the company”— the green apron—"knows no bounds."
"It’s not the miss that matters," he wrote. "It’s what comes next. What’s the diagnosis of the problem? What’s the impact on morale? And what’s the strategy to fix it?"
Schultz added that the company’s fix "needs to begin at home."
"U.S. operations are the primary reason for the company’s fall from grace," he said. "The stores require a maniacal focus on the customer experience, through the eyes of a merchant. The answer does not lie in data, but in the stores."
Shares of the Seattle company were up 1.2% to $74.01 in early trading.
Berkshire Hathaway reportedly sold about 115 million Apple shares, about 13% of its stake.
Related: Why Warren Buffett sold Apple stock
Apple remains the conglomerate’s biggest holding, representing about 40% of the conglomerate's stock portfolio, which had a total value of about $335.9 billion at the end of the quarter.
Check back for updates throughout the trading day
Stock futures rose on Monday after a softer-than expected April jobs report on Friday prompted hopes that inflation might ease and the Federal Reserve might cut interest rates.
At last check futures on the Dow Jones Industrial Average indicated an open 136 points higher to 38,968, while those on the S&P 500 rose 18 to 5,173.75. The Nasdaq Composite was indicated 46 points to 18,047.50 higher at the market open.
Stocks finished higher Friday, also powered in part by Apple's (AAPL) better-than-expected quarterly earnings.
Jobs and average hourly earnings were below expectations, while the unemployment rate inched higher.
"The April jobs report doesn’t create an urgent concern for the labor market or the economy, and it found a way to thread the needle between being soft enough but not too weak,” eToro investment analyst Bret Kenwell had said.
On Monday Bloomberg reported, though, that as bond investors “cautiously increase bets on [Fed interest-rate] policy easing this year, inflation remains sticky and could limit what the Fed can do, which in turn could keep bonds in their recent ranges.”
“Jay Powell was justified in saying that the job market isn't as tight as it used to be,” said Thierry Wizman, global foreign-exchange and rates strategist at Macquarie. “That's not because payroll growth slowed, but because wage growth slowed and labor-market turnover has been weak."
"In view of the strength of immigration inflows, traders should focus away from job growth and toward measures of turnover and wages to gauge the Fed's disposition,” he said.
Among equities in focus, Berkshire Hathaway Class B shares (BRK.B) were 0.8% higher in the premarket. The group, led by CEO Warren Buffett, on Saturday reported that operating profit rose 39% from a year earlier to $11.2 billion.
Berkshire did cut its stake in tech giant Apple by 13%, building its cash on hand to $189 billion. Bloomberg reported that Buffett nonetheless praised Apple, hinting that tax issues prompted the cut in the holding. Apple shares at last check ticked 0.4% lower in the premarket.
This week investors will be particularly awaiting a number of earnings reports, including, CNBC reported, Palantir after the closing bell on Monday, Walt Disney and Lyft on Tuesday, Uber and Bumble on Wednesday and Warner Bros. Discovery on Thursday.
Related: Veteran fund manager picks favorite stocks for 2024
