Wall Street ends up on earnings optimism; eyes remain on Middle East

[October 17, 2023]  By Caroline Valetkevitch

NEW YORK (Reuters) - Major U.S. stock indexes ended sharply higher on Monday as investors were optimistic about the start of earnings season, while transportation and small-cap shares also jumped.

Market participants were monitoring the Israeli war in Gaza, but appeared to be taking more of a risk-on stance on Monday, with safe-haven gold prices down.

Israeli forces continued their bombardment of Gaza, which has killed thousands, including many women and children, after efforts to arrange a cease-fire stalled.

The Cboe Volatility index was lower, while the Dow registered its biggest daily percentage gain in about a month. Also, the economically sensitive Dow Jones transportation average jumped 1.9% in its biggest one-day percentage increase since late July, and the Russell 2000 small-cap index rose 1.6%.

Consumer discretionary led gains among S&P 500 sectors, although all of the sectors were higher on the day.

Charles Schwab shares jumped 4.7% as the brokerage posted a smaller-than-expected drop in quarterly profit.

Quarterly results from large banks Goldman Sachs, Bank of America, Morgan Stanley, pharmaceutical giant Johnson & Johnson, electric vehicle maker Tesla and video-streaming pioneer Netflix are due this week.

Third-quarter earnings for S&P 500 companies are estimated to have increased 2.2% year-over-year, up from an estimated increase of 1.3% a week earlier, according to LSEG data Friday.

"At least for today, this is a market that sees a stronger earnings season, a stronger week in terms of earnings," said Quincy Krosby, chief global strategist, LPL Financial in Charlotte, North Carolina.

At the same time, global leaders are trying to make sure that the Middle East conflict "remains contained," she said.

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 28, 2023. REUTERS/Brendan McDermid/File Photo

The Dow Jones Industrial Average rose 314.25 points, or 0.93%, to 33,984.54, the S&P 500 gained 45.85 points, or 1.06%, to 4,373.63 and the Nasdaq Composite added 160.75 points, or 1.2%, to 13,567.98.

Data earlier showed that the New York Fed's General Business Conditions index, otherwise known as "the Empire State index," has gone back into negative territory.

Philadelphia Fed President Patrick Harker reiterated his view from Friday that the U.S. central bank was likely done with its rate-hike cycle.

Lululemon Athletica shares rose to their highest level in almost two years as the Canadian sportswear apparel maker was set to join the S&P 500 index this week, replacing Activision Blizzard. Lululemon shares ended up 10.3%.

Volume on U.S. exchanges was 9.60 billion shares, compared with the 10.38 billion average for the full session over the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 2.59-to-1 ratio; on Nasdaq, a 1.91-to-1 ratio favored advancers.

The S&P 500 posted 11 new 52-week highs and 6 new lows; the Nasdaq Composite recorded 33 new highs and 206 new lows.

(Additional reporting by Ankika Biswas and Shashwat Chauhan in Bengaluru; Editing by Arun Koyyur, Vinay Dwivedi and Aurora Ellis)

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