Wall St ends sharply higher as earnings optimism fuels risk appetite

U.S. stocks jumped on Monday with finance and technology shares providing much of the upside muscle, as upbeat quarterly earnings results revived risk appetite and investors grew less fearful about regional bank credit quality.

A broad rally sent all three major U.S. stock indexes to a sharply higher close. The small cap Russell 2000 outperformed its larger counterparts, rising 2.0%.

“It’s a good, solid, across-the-board move, there’s not a lot of negative in the market,” said Paul Nolte, senior wealth advisor & market strategist at Murphy & Sylvest in Elmhurst, Illinois. “There’s some relief from the financials ... investors are looking at it as maybe a bit of an overreaction on the downside last week.”

“As far as the market’s concerned, everything is wonderful again.”

Apple stock touched a record high, while Meta, Netflix and Alphabet gained between 1.3% and 3.3%.

The Philadelphia Semiconductor Index breached an all-time high, ending the session up 1.6%.

Third quarter earnings season has shifted into high gear. Notable results this week include Tesla, Netflix, IBM, Intel, GM and Ford, along with a spate of other high-profile industrial firms, including aerospace, transports and diversified manufacturers.

Upcoming U.S. regional bank results are expected to provide a closer read of the sector on the heels of last week’s selloff, which was driven by fears of systemic credit stress.

Analysts currently expect third-quarter S&P 500 earnings growth, on aggregate, of 9.3% year-on-year, marking an improvement over their 8.8% growth estimate as of October 1.

“A lot of the uncertainty that the businesses were concerned about -- tax legislation, the tariffs -- earlier this year has subsided for the time being, and that’s allowed companies to focus on earnings and profitability,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts.

Sentiment was given an extra boost by White House economic advisor Kevin Hassett, who said the federal government shutdown is likely to end this week.

With the federal shutdown entering day 20, investors and policymakers have had to feel their way forward amid the resulting data blackout. But on Friday the Labor Department will make an exception by releasing its September consumer price index (CPI), which will provide the data dependent U.S. Federal Reserve with a glimpse at the state of inflation and perhaps an indication regarding the extent to which President Donald Trump’s tariffs are affecting price growth.

In the ongoing trade skirmish between Washington and Beijing, Trump suggested easing tariffs on China if Beijing resumes key agricultural purchases including soybeans. Trump blamed the latest showdown on China’s rare earth export controls.

The Dow Jones Industrial Average rose 515.97 points, or 1.12%, to 46,706.58, the S&P 500 gained 71.12 points, or 1.07%, to 6,735.13 and the Nasdaq Composite gained 310.57 points, or 1.37%, to 22,990.54.