(Bloomberg) -- US stocks closed higher Monday as investors weighed the market implications of the attack on Donald Trump over the weekend and looked ahead to a rush of earnings this week.
The S&P 500 Index and the Nasdaq 100 both advanced 0.3%. The Dow Jones Industrial Average gained 0.5% and closed at an all-time high. The strength seen in small-cap stocks last week continued, with the Russell 2000 Index rising 1.8%, and notching the best 4-day run since November 2020.
The political implications of the assassination attempt at least briefly overshadowed the speculation about Federal Reserve policy and the economy that have been driving the stock market. The weekend’s events were largely seen as giving another jolt of momentum to Trump’s candidacy as supporters rallied around the former president.
This weekend’s development was “one of the reasons why we have some cash on the sidelines and encourage our clients to always keep some cash stashed away,” said Michael Landsberg, chief investment officer at Landsberg Bennett Private Wealth Management. The attack “can undoubtedly raise the overall risk of the stock market and reduce liquidity,” Landsberg added.
Trump’s policies are seen as positive for certain corners of the stock market, like shares of banks, prison operators and oil companies. But the broader-market implications are unclear, given that his tariff and tax-cut policies would likely worsen inflation pressures and keep interest rates higher, which pushed up bond yields on Monday.
Investors are also watching the slew of earnings slated for the week and fresh economic data that could help determine the Fed’s policy path. Among the bigwigs, Goldman Sachs Group Inc. reported a surge in profit, driven by its trading unit.
Shares of Trump’s media company surged. The stock has been volatile since its March debut as traders responded to Trump and President Joe Biden’s shifting odds to clinch the presidential race.
Political uncertainty aside, investors will remain focused on an earnings season that’s ramping up in the US this week with reports from Netflix Inc., Johnson & Johnson and State Street Corp., among others.
“Shocking events tend not to deter investors, who we expect will remain focused on economic and earnings results,” said John Stoltzfus, chief investment strategist at Oppenheimer Asset Management. The strategist added that markets are now “practical in digesting what occurs in a world that has always been uncertain and is likely to remain at times chaotic.”
Sectors to Watch
- Crypto stocks outperformed as Bitcoin jumped the most in almost two months after Trump’s defiant response to an assassination attempt spurred speculation that the pro-crypto former president’s chances of winning reelection have improved
- Private prison stocks GEO Group and CoreCivic, and gun stocks Smith & Wesson Brands and Sturm Ruger gained, also on Trump’s higher reelection odds
- Renewable energy stocks slid as Trump and Republicans are typically seen as bad for the group as compared to Democrats
- Auto dealer stocks were in focus after AutoNation warned the cyberattack that crippled retailers across the country until early this month cost the company a significant chunk of second-quarter earnings
- Dialysis firms are reportedly being probed by the US Federal Trade Commission
Markets at a Glance
- S&P 500 Index rose 0.3%
- Dow Jones Industrial Average rose 0.5%
- Nasdaq Composite Index rose 0.4%
- Nasdaq 100 Index rose 0.3%
- Russell 2000 Index rose 1.8%
- 10-year Treasury yield rose 4.1 basis points
- Cboe Volatility Index rose 0.62 points
- Bloomberg Dollar Index rose 0.2%
- West Texas Intermediate crude fell 0.3% to $82 a barrel
- Euro fell 0.1%
Here Are the Most Notable Movers
- The shares of Donald Trump’s media company surged 31% Monday after a failed assassination attempt on the former president over the weekend boosted momentum for the so-called Trump trade across markets.
- Private prison operators and firearm-related companies were among stocks rallying Monday as a failed assassination attack over the weekend boosted former president Donald Trump’s bid to return to the White House.
- Solar and renewables shares were lower as investors sold stocks that could be negatively impacted by a potential Trump administration
Notes From the Sell-Side
- Baxter International fell 3.8% and STAAR Surgical shares slumped 4% after Morgan Stanley downgraded both stocks to underweight from equal-weight ahead of earnings.
- Caesars Entertainment shares dropped 2% after Susquehanna downgraded the hotel and casino operator to negative from neutral, saying its underperformance versus Las Vegas competitor MGM Resorts International is “very likely” to continue.
- Apple Inc. surged to another record high on Monday after the tech giant was named a top pick at Morgan Stanley, with the broker seeing the launch of the company’s artificial intelligence platform triggering a record rush among users to upgrade their smartphones, tablets and computers.
- Netflix Inc. shares rose 1.4% Monday, the most intraday in a month, after both Morgan Stanley and Bank of America raised their price target on the streaming service ahead of its July 18 earnings announcement.
- TD Synnex Corp. shares rose 2.3%, after RBC Capital Markets analyst Ashish Sabadra raised the recommendation to outperform from sector perform, saying he predicts growth for the information-technology services company in the back half of the year.
- UDR Inc. shares gained 0.5% Monday as BMO Capital Markets analyst John Kim raises the recommendation on the real estate stock to outperform from market perform, saying he favors “coastal multifamily REITs heading into 2Q24.”
- Celsius Holdings shares slid 11%, after TD Cowen cut its price target on the energy-drink marker to $68 from $85, citing “sharply” slowing sales growth.
- Ulta Beauty shares fell 4.3%, after being removed from Oppenheimer’s top picks. Analysts say that the beauty retailer’s “aggressive” promotions over the past weeks suggest ongoing challenges and potential risks to FY24 guidance.
- Humacyte shares jumped 20% after BTIG boosted its price target on the company to $11 from $8 ahead of an upcoming regulatory decision.
Related Market News
- Taking Stock: A rapid shift from technology high-flyers to risky small-caps late last week had traders wondering whether a sector rotation is underway.
- European Stocks: European equities dropped in light trading after weak economic data from China and as disappointing updates from Swatch Group AG and Burberry Group Plc dragged down luxury shares.
- Inside Asia: Emerging market Asian currencies declined as the dollar rose after an assassination attempt on former US President Donald Trump.
This story was produced with the assistance of Bloomberg Automation.
--With assistance from Henry Ren, Jessica Menton, Natalia Kniazhevich and Cristin Flanagan.
©2024 Bloomberg L.P.