Dow closes above 43,000 for first time

Good Morning from #Germany, where the "Glorious 5" #SAP, Siemens, Deutsche Telekom, Allianz, Munich Re continue to dominate the stock market and returns following good numbers from SAP. While the benchmark index Das has risen by 16.6% Ytd, the Glorious 5 have surged even… pic.twitter.com/hidjw27wOc

— Holger Zschaepitz (@Schuldensuehner) October 22, 2024

The stock market reached new heights on Monday as investors looked forward to the upcoming wave of corporate earnings reports. The S&P 500 rose 0.77% to close at 5,859.85, while the Dow Jones Industrial Average advanced by 201.36 points to finish at 43,065.22. Both indices hit record highs, with the Dow closing above the 43,000 mark for the first time. Technology stocks led the gains within the S&P 500. Upcoming corporate earnings reports from major companies are driving investor optimism. Several key results are expected on Tuesday and Wednesday, building on a solid start to the third-quarter earnings season.

Stocks To Watch | 📊 Ready, set, trade! Keep an eye on these stocks as they set the market abuzz #StockMarket pic.twitter.com/lpcyEjWrLH

— ET NOW (@ETNOWlive) October 22, 2024

Early signs of a recovery in banking profits have bolstered the broader market, contributing to this upward trend.

The S&P 500's price to peak earnings ratio has moved up to 25.8, its highest level since June 2000 and 50% above the historical median. $SPX

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— Charlie Bilello (@charliebilello) October 21, 2024

Bank of America reports that of the 30 S&P 500 companies that have released their earnings thus far, results have surpassed consensus estimates by about 5% on average. Despite the market’s recent gains, investor anxiety persists due to several factors. These include the impending presidential election, rising Treasury yields, uncertainty over Federal Reserve policies, and geopolitical tensions in the Middle East.

Dow advances amid corporate earnings optimism

Baird investment strategist Ross Mayfield commented, “All-time-highs sentiment is maybe a little stretched, so it wouldn’t be surprising to see some volatility return.” The S&P 500 has risen nearly 23% this year, excluding reinvested dividends. The current bull market has seen the benchmark index rally about 63% since its closing low in October 2022. As the third-quarter earnings season gets underway, Oppenheimer remains positive. The firm concludes that earnings are “off to a pretty good start” and that the markets could continue to climb higher despite uncertainties surrounding the U.S. presidential election. Bank of America’s equity and quant strategist, Ohsung Kwon, expects the upcoming September retail sales data to exceed expectations, further bolstering investor confidence. The ‘no landing’ narrative could continue to strengthen if we get blowout retail sales this week,” Kwon said. However, Deutsche Bank macro strategist Henry Allen cautions against dismissing rising inflation risks. He cites several factors contributing to these concerns, including central banks’ extensive monetary easing and increased commodity prices. UBS projects solid earnings growth in the third quarter, albeit below the second quarter’s performance. The bank expects S&P 500 earnings per share to grow by 5-7% for September, compared to 11% in the second quarter. UBS maintains its full-year earnings growth forecast of 11% for 2024, confident in large-cap corporate profit growth against a resilient macroeconomic backdrop.