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FILE – The front of the New York Stock Exchange is shown on Thursday, April 11, 2024 in New York.

AP Photo/Peter Morgan, File

Stock market today: Wall Street gains ground ahead of a big week for earnings reports

By The Canadian Press

Published 11:50 PDT, Mon April 22, 2024

Last Updated: 12:42 PDT, Mon April 22, 2024

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NEW YORK (AP) — U.S. stocks are charging higher Monday and clawing back a chunk of their big losses from last week, which was the worst for the S&P 500 in more than a year.

The S&P 500 was up 1.2 per cent in late trading, recovering more than a third of last week's rout. The Dow Jones Industrial Average was up 353 points, or 0.9 per cent, with a little less than an hour remaining in trading. The Nasdaq composite was 1.4 per cent higher.

The rally was widespread, and most stocks rose. In the S&P 500, technology stocks led the way to bounce back from their worst week since the COVID crash of 2020.

Nvidia leaped 4.7 per cent, and Apple climbed 1 per cent as Treasury yields stabilized in the bond market. Last week, a jump in yields cranked the pressure up on stocks, particularly those seen as the most expensive and making their investors wait the longest for big growth.

Bank stocks were also strong following some encouraging profit reports. Truist Financial rose 3.6 per cent for one of the market's biggest gains after it reported better profit for the start of the year than analysts expected.

That helped offset a 4.4 per cent drop for Tesla, which announced more cuts to prices over the weekend. Elon Musk’s electric-vehicle company has seen its stock drop more than 40 per cent already this year, and it will report its first-quarter results on Tuesday.

It’s a big week for earnings reports generally, with roughly 30 per cent of the companies in the S&P 500 scheduled to say how much they made during the year’s first three months. That includes several companies that have come to be known as part of the “Magnificent Seven,” beyond Tesla. This handful of companies was responsible for the majority of the S&P 500’s big gain last year, raising the bar of expectations for them to justify their stock prices.

Analysts believe those seven stocks as a group saw growth in their earnings per share slow to 39 per cent from 63 per cent at the end of last year, according to strategists at Bank of America. This past quarter may also have marked the trough for earnings declines among the other 493 companies in the index.

The difference in growth between the Magnificent Seven and the rest of the S&P 500 should close by the end of the year, strategists Ohsung Kwon and Savita Subramanian said in a BofA Global Research Report.

Verizon Communications helped kick off this week's reports by disclosing a drop in profit that wasn't as bad as analysts expected. It cited price increases and other measures to support its revenue. Verizon's stock swung from an early gain to a loss of 4.4 per cent after it reported weaker revenue for the first quarter than expected and kept its forecast for full-year profit the same.

Even more pressure than usual is on companies broadly to deliver fatter profits and revenue. That’s because the other big factor that sets stock prices, interest rates, looks unlikely to offer much help in the near term.

Top officials at the Federal Reserve warned last week that they may need to keep interest rates high for a while in order to ensure high inflation is heading down to their 2 per cent target. That was a big letdown for financial markets, dousing hopes that had built after the Fed earlier signaled three cuts may come this year.

Lower rates had earlier appeared to be on the horizon after inflation cooled sharply last year. But a string of reports this year showing inflation has remained hotter than expected has raised worries about stalled progress.

Worries about “sticky” inflation are one of the reasons strategists at Stifel are encouraging investors to stay cautious.

Stocks generally look more expensive, in part because of a frenzy on Wall Street around anything related to artificial-intelligence technology. Some analysts are suggesting stock prices could keep steaming ahead as the mania around AI builds even higher, but Stifel's Barry Bannister and Thomas Carroll point to signs that “the speculative fever would break” for tech, including a possible top for the price of bitcoin. They suggest caution well into the year's third quarter, which stretches from July through September.

Bitcoin remains below its peak set a month ago, but it rose Monday.

In the bond market, the yield on the 10-year Treasury eased to 4.61 per cent from 4.63 per cent late Friday. The two-year Treasury yield, which moves more closely with expectations for the Fed, slipped to 4.97 per cent from 4.99 per cent.

In markets abroad, stocks rose 1.8 per cent in Hong Kong but fell 0.7 per cent in Shanghai after the People’s Bank of China kept its 1-year and 5-year loan prime rates unchanged. The Chinese central bank is waiting to see if more stimulus is needed after the economy expanded at a faster-than-expected rate in the first three months of the year, according to analysts.

Indexes were higher across much of the rest of Asia and Europe.

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AP Business writers Matt Ott and Elaine Kurtenbach contributed.

– Stan Choe, The Associated Press