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US benchmarks close higher as earnings season points to strong growth

US stocks advanced as traders remain bullish about the corporate earnings season
Wall street street sign
US stocks rose Monday as the market cheered earnings season
  • US stocks close higher

  • Earnings season cheers

  • Bristol-Myers Squibb sheds 9.7% but Merck & Company surges

  • US crude slips

US stocks surged to a higher close on Monday as traders basked in a positive first quarter earnings season.

The Dow Jones closed 212 points at 24,573, while the  broader based S&P 500 gained over 21 points at 2,677. The Nasdaq added around 49 points at 7,156.

Among the risers, Merck & Company (NYSE:MRK) added 2.61% to US$58.66 as it presented promising results on Monday for its cancer drug Keytruda at the American Association for Cancer Research’s annual meeting.

Elsewhere, US crude, West Texas Intermdiate, shed 1.48% to US$66.39 a barrel.

In Toronto, the TSX added over 22 points higher at 15,296, while the venture exchange was up over four points at 800.35.

Shares of Kinder Morgan Canada (TSE:KML) added 0.87% on the day to C$17.39 after Canada Prime Minister Justin Trudeau at the weekend offered financial aid to ensure the Trans Mountain pipeline project went ahead.

David Madden, analyst at London based CMC Markets, said:  "US equity indices have started the week on a strong note as earnings season continues.

"For the time being, dealers are focusing on the corporate and economic updates from the US and paying less attention to the political landscape."

Bank of America (NYSE: BAC) was the latest US bank to report its first-quarter figures and it didn't disappoint the market, with earnings per share and revenue both topping analysts’ expectations. Shares added 0.40% to US$29.93.  

"Last month US retail sales grew by 0.6%, ahead of economists’ expectations for a reading of 0.4%, and well up on the 0.1% decline in February," said Madden.

"The headline figure was rosy, but the core report showed a less bullish situation. Core retail sales showed an increase of 0.2%, meeting forecasts and unchanged on the month.

The New York Fed manufacturing index in April slipped to 15.8 from 22.5 in March, with economists expecting a reading of 18.8.

Afternoon trading session:

In afternoon trade, US stocks moved even higher, with optimism still extending across the indices.

The Dow jumped 299 points to 24,659

The S&P 500 picked up 29 points at 2,685

The Nasdaq added 69 points at 7,176

The TSX lost a bit of momentum, meanwhile, but still managed to stay up, adding 30 points at 15,303

Shares in the pharmacy CVS (NYSE:CVS) fared particularly well, rising 7% US$67.70 after it emerged that its would-be rival Amazon no longer wants to sell drugs to hospitals.

Bristol-Myers Squibb (NYSE:BMY), meanwhile, shed 9.7% as investors sent its shares down despite its announcement that its drug Opdivo as well as its anti-cancer drug Yervoy cut the risk of cancer progression dramatically compared to chemotherapy.

The British pound jumped 0.6% to US$1.4327, reaching its priciest point in over a year and a half.

Early trading session:

US stocks are up in early trade as investors are putting their concerns about the Syrian conflict on the back burner and zeroing in on the corporate earnings season.  

The Dow is up 214 points at 24,574

The S&P 500 has gained 18 points at 2,674

The tech-heavy Nasdaq is up 39 points at 7,135

Up in Toronto, the TSX rose by 35 points at 15,310

In other news, the yield on ten-year US Treasuries is up 3 basis points at 2.86% while the price of a barrel of West Texas Intermediate crude oil has slipped 0.9% to US$66.79 per barrel. Gold is also flat at US$1,345.46 an ounce.

Bank of America’s stock (NYSE:BAC) is holding steady at US$29.75 despite reporting relatively strong first-quarter results, which surpassed Wall Street analysts’ expectations.  Shares in Netflix Inc (NASDAQ:NFLX), the movie and video streaming group, were also flat ahead of its earning announcement after the close of the market.

Goldman Sachs (NYSE:GS), which is up 1.3% and Morgan Stanley (NYSE:MS), which rose 1.6%, as well as the beleaguered General Electric, which is down 1.6%, are also on the list of companies which report earnings this week.

An early winner is J.B. Hunt Transport Services (NASDAQ:JBHT) which reported first-quarter net earnings of US$118.1mln, and is seeing a 6.5% jump in its share price.

The pharmaceutical drug Merck & Co. (NYSE:MRK) is also up 3% on the release of rosy results for patients with lung cancer who underwent clinical trial related to its cancer Keytruda.

Weighing down the markets, meanwhile, are Nektar Therapeutics (NASDAQ:NKTR), a clinical stage biopharma group, which lost 8.6%, and Bristol Myers Squibb (NYSE:BMY), which lost 7.7%, in part on the news that it’s forming a partnership with Illumina to create in vitro diagnostics for its cancer drugs.


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