Stocks rebounded on Monday after opening lower as investors looked to the continuation of strong earnings reports from big companies. Tesla and Netflix rose ahead of their third quarter reports later this week.
The S&P 500 rose 0.2% while the Dow Jones Industrial Average fell 40 points. The Nasdaq Composite gained 0.6%.
So far, 41 S&P 500 components have reported third quarter results, with 80% exceeding EPS expectations, according to data from FactSet. Taking into account the companies already announced and estimates for the rest, earnings growth will be 30% in the third quarter, the third highest quarterly growth rate for S&P 500 companies since 2010, according to FactSet.
A number of big names will be reporting in the coming week, including Netflix, Johnson & Johnson, United Airlines and Procter & Gamble on Tuesday. Tesla, Verizon, and IBM are among the other names on deck for the week.
Strong results from the first week of earnings, including from the biggest banks, have put key averages within striking distance of their all-time highs. The Dow is roughly 1% off its record high, while the S&P 500 and Nasdaq Composite are 1.5% and 2.9% below their highs, respectively.
A few things initially depressed the mood on Monday. China reported disappointing GDP overnight with annual growth of 4.9% in the third quarter. That was less than the 5.2% growth expected by economists polled by Reuters. Industrial production in China also fell short of expectations last month.
US industrial production also fell in September as supply bottlenecks continued to hamper manufacturing. Production fell nearly 1.28% to its lowest level since February when it fell 3.02%, according to data released Monday by the Federal Reserve.
And the 10-year government bond yield climbed higher, once hitting 1.61% on Monday morning. Rising interest rates have put some pressure on tech stocks at times this year as investors move from growth stocks to more value-driven names.
Disney shares lost more than 3% after Barclays downgraded the stock and forecast that streaming subscriber growth will slow.
But the major averages come from a successful week based on strong earnings reports, and results later that week could change the tone back to an uptrend if they follow the same trend. The Dow rose 382 points on Friday to end the week up 1.58% for its best week since June. The S&P 500 rose 1.82% last week for its best week since July, while the Nasdaq Composite had its best week since late August, with the tech-heavy index gaining 2.18%.
In addition to Goldman Sachs’s better-than-expected gains on Friday, positive economic data also boosted stocks. Retail sales rose 0.7% in September, the Census Bureau said on Friday, while economists polled by Dow Jones were expecting a 0.2% decline.
"Wall Street expected spending to slow down, but it turned out not to mess with US consumers," said Edward Moya, senior market analyst at Oanda. "Consecutive months of better-than-expected retail sales data show that the consumer is looking good on the way into the holiday season," he added.
With the reporting season in full swing, investors will be on the lookout for company comments on supply chain bottlenecks and inflation, among other things.
"Growth in 2022 is likely to be fueled by the delayed effects of monetary stimulus, the delayed effects of rising consumer wealth, reopening and inventory building," Evercore ISI chairman Ed Hyman wrote in a statement to customers on Sunday. "Problems in the supply chain are likely to subside, and unsatisfied demand from this year will likely be met next year. Wages are likely to rise and consumer incomes are likely to increase."
Bitcoin pulled back from its recent high, but stayed above $ 60,000 on Sunday, according to Coin Metrics, as the first exchange-traded Bitcoin futures fund starts trading this week. Bitcoin rose more than 2% to $ 62,062.89 on Monday.
Become a smarter investor with CNBC Pro.
Get stock picks, analyst calls, exclusive interviews and access to CNBC TV.
Sign in to start one Try it for free today