US stocks opened higher with the S&P 500 Index and the Nasdaq Composite edging further into record territory as technology shares advanced on optimism ahead of Apple Inc’s first quarter earnings report.
The Standard and Poor’s 500 Index advanced 5 points or 0.2% to 2122.39 points. If the benchmark index closed at this point, it would be its third consecutive record close.
The technology heavy Nasdaq Composite edged up 13 points or 0.2% 5105 points boosted by a 2% rally in technology on optimism ahead of Apple reporting just after the bell.
The Dow Jones Industrial Average jumped 35 points or 0.18% to 18,118 points, 1.1% shy of its record close.
“Traders are cautiously optimistic that a good report from Apple and other tech names can continue to drive the Nasdaq further,” Michael James, a Los Angeles-based managing director of equity trading at Wedbush Securities Inc, told Bloomberg.
“If that happens, we’re probably going to take the rest of the market to new highs.”
The Nasdaq Composite topped its Dot-com era record close last week boosted by a rally in technology and social media shares which also pushed the S&P to a record close on Friday.
However, according to data from Fact set, earnings, including the 201 S&P companies that have reported, are expected to fall by 2% from a year earlier.
This is the first year on year decline in overall quarterly earnings since the third quarter of 2012.
More than 75% of the companies that have reported exceeded estimates. This was however attributed more to slashed forecasts rather than organic growth with only 47% of the companies topping revenue estimates.
“There’s very little inflation and usually inflation helps with revenue growth” as people are less likely to postpone purchases in a high-inflation environment, Sam Stovall, U.S. equity strategist at S&P Capital IQ, told the Wall Street journal.
“This bull market does have legs, but we’re getting a bit vulnerable to a correction,” said Mr. Stovall. “Because interest rates are so low, inflation is so low…there are not a lot of alternatives to equities,” he added.
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