By Dan Strumpf
Stocks posted modest gains Monday, as investors treaded
carefully following last week's rally and looked ahead to a number
of corporate earnings reports this week.
The Dow Jones Industrial Average rose 42 points, or 0.3%, to
16451 in afternoon trading. The S&P 500 index gained six
points, or 0.3%, to 1871. The Nasdaq Composite Index added 23
points, or 0.6%, to 4118.
Monday was marked by light trading activity, traders said, with
European markets closed and little in the way of economic data and
corporate earnings reports. Many investors said they were looking
ahead to earnings updates due later in the week for additional cues
on stocks' direction.
Among the market's biggest gainers were companies rocked by the
recent selloff in the biotechnology, social-media and other
high-growth sectors. Shares of Facebook gained 3.6%, while Twitter
rallied 2.6% and the Nasdaq Biotechnology index tacked on 2%.
Dan Veru, chief investment officer at Palisade Capital
Management, which oversees about $5 billion in assets, said he
expects investors to be pickier in deciding which high-growth
stocks to reward, adding he is focused on owning those with growing
businesses. "All these stocks went up together and they go down
together," he said. "You're going to see a separation."
Trading volumes Monday were on track to be the lightest all
year, according to Jonathan Krinsky, chief market technician at MKM
Partners.
"People are focused on earnings later this week, but the big
story today is the very light volumes," said Bill Nichols, head of
U.S. equities at brokerage Cantor Fitzgerald, adding that the
Patriots' Day holiday in Massachusetts was keeping many big
investors in the Boston asset-management community at home.
Investors were awaiting a number of updates from American
corporations this week, though analysts aren't expecting a blowout
quarter. So far, 17.6% of companies in the S&P 500 have
reported quarterly earnings, according to FactSet. Analysts have
cut their expectations considerably in recent months, and profits
are expected to decline 1.5% in the quarter, according to FactSet,
after the harsh winter curbed economic activity.
Among major earnings reports expected this week, four Dow
components--Travelers, McDonald's, United Technologies and
AT&T--are due to report Tuesday.
Charlie Smith, co-founder of Fort Pitt Capital Group, which
manages about $1.7 billion out of Pittsburgh, said he is digging
deeper into corporate earnings reports this quarter in search of
companies with stronger financials and is giving more weight to
names that show genuine growth.
"The bar's been lowered enough where just about everybody can
step right over it now," he said. "Our theme for this year is
trying to tease out where real growth is." Mr. Smith said he is
invested in certain companies in the aerospace and semiconductor
sectors that are boosting sales.
Although stocks have seen more turbulence this year following
last year's 30% gain in the S&P 500, most major indexes remain
close to record highs. Many highflying growth stocks in the
technology sector have been hammered in recent weeks, but the
S&P 500 index is up 1.1% so far this year and is just 1.2% from
its record high of 1890.90 reached April 2.
On Thursday, the Dow slipped 16 points, or 0.1%, to snap a
three-session win streak but still capped the biggest weekly point
and percentage gain since the week ending Dec. 20. Meanwhile, the
S&P 500 and Nasdaq Composite Index rose in all four sessions
last week. The S&P 500 rose in all four trading days last week,
posting its biggest weekly percentage gain since the week ending
July 12.
The stock market was closed Friday for the Good Friday
holiday.
The yield on the 10-year Treasury note slipped to 2.719%, from
2.721% late Thursday.
Gold futures fell 0.7% to $1,283.80 an ounce, after settling
Thursday at a two-week low. Crude-oil futures rose 0.1% to $104.37
a barrel. The dollar edged up against the yen and the euro.
In corporate news, Advanced Micro Devices surged 12.2% after the
semiconductor maker late Thursday reported first-quarter adjusted
earnings and revenue that exceeded expectations and provided an
upbeat sales-growth outlook for the current quarter.
Netflix rose 0.6%, ahead of the video-streaming services
company's first-quarter results due out after the close. Netflix's
stock has swung widely in recent weeks as investors have pulled out
of many high-growth technology stocks on concerns over valuations.
Shares bounced 5.8% last week after falling 27% over the previous
six weeks. The stock had run up nearly fourfold in 2013.
Oil-field-services company Halliburton rose 3.2% after reporting
first-quarter earnings and revenue that topped analysts'
estimates.
Hasbro reported better-than-expected first-quarter adjusted
earnings amid strong sales of girls' products and improving gross
margin, although revenue fell short of estimates. The toy maker's
stock rose 1.3%.
Asian markets were mostly lower. China's Shanghai Composite slid
1.5% amid share supply concerns, after the China Securities
Regulatory Commission disclosed late Friday a list of 28 companies
planning initial public offerings.
Write to Dan Strumpf at daniel.strumpf@wsj.com