By Ellie Ismailidou and Sara Sjolin, MarketWatch
Investors shrug off failed coup attempt in Turkey, focus on
strong earnings by B. of A.
U.S. stocks on Monday reversed early losses to trade modestly
higher, led by a rally in technology stocks and putting the Dow
industrials on track for a record-high close for the fifth session
in a row.
Stocks got a boost by a flurry of upbeat earnings reports from
financial companies, most notably Bank of America Corp.(BAC).
News that Japan's SoftBank Group Corp.(9984.TO) is buying Apple
Inc. (AAPL) supplier ARM Holdings PLC(ARMH) buoyed the technology
sector, as investors were bracing for the release of earnings from
Netflix (NFLX), Yahoo Inc.(YHOO) and International Business
Machines Corp.(IBM) after the bell.
Read:Yahoo's looming sale to take center stage during earnings
(http://www.marketwatch.com/story/yahoos-looming-sale-to-take-center-stage-during-earnings-2016-07-15)
The S&P 500 gained 4 points, or 0.2%, to 2,166, led by a
0.7% gain in tech but weighed by a 0.5% drop in energy shares,
which were pulled lower by a nearly 2% drop by oil futures . Four
out of the index's 10 sectors were in positive territory.
The Dow Jones Industrial Average added 18 points, or 0.1%, to
18,535, boosted by a 1.4% gain in Apple Inc.(AAPL) but weighed by a
1.2% drop in Merck & Co. Inc. (MRK)
The Nasdaq Composite added 28 points, or 0.6%, to 5,058.
The U.S. stock market was zeroing in on earnings, analysts said,
largely shrugging off a failed coup attempt in Turkey over the
weekend, which left almost 300 people dead. The iShares MSCI Turkey
ETF(TUR) was down 6.6%, trading near its lowest level in a
month.
Earnings are the factor that might make or break this market,
after a strong advance that brought both the S&P and the Dow to
all-time highs last week even as the U.S. has been in a so-called
earnings recession, said Quincy Krosby, a market strategist at
Prudential Financial.
"What the market wants to hear at this stage is that, even at
the margin, things are getting better," Krosby added.
Valuations were at the center of the debate, according to John
Conlon, chief equity strategist at People's United Wealth
Management, as "the market is selling at very high earnings
multiples, predicated on the assumption that we are moving towards
positive earnings comparisons [quarter over quarter] and earnings
growth in 2017."
"Anything coming out of earnings reports suggesting that this is
not going to happen, could cause the market to sell off," Conlon
added.
On the U.S. economic front, a closely watched index of
home-builder confidence eased in July, an industry group said
Monday
(http://www.marketwatch.com/story/home-builder-sentiment-eases-one-point-in-june-nahb-says-2016-07-18).
Movers and shakers: The earnings season continued at full speed
on Monday. Bank of America Corp.(BAC) said its quarterly profit
fell as the second largest U.S. lender by assets was hurt by the
continued drag of low interest rates, though the bank's results
beat expectations. Shares rose 2.6%.
Hasbro Inc.(HAS) tumbled 7.5%, despite the fact that the company
reported better-than-expected revenue and profit
(http://www.marketwatch.com/story/hasbro-beats-estimates-on-demand-for-disney-toys-2016-07-18),
as offerings such as Star Wars and Frozen brand toys continued to
drive growth at the toy maker.
Charles Schwab Corp.'s(SCHW) edged lower by 0.6% after its
revenue beat forecasts,
(http://www.marketwatch.com/story/charles-schwab-revenue-beats-expectations-while-earnings-match-2016-07-18)
while its earnings matched expectations.
U.S.-listed shares of U.K. chip designer ARM Holdings PLC(ARMH)
surged 41.7% after news that Japan's SoftBank Group Corp.(9984.TO)
is buying the Apple Inc. (AAPL) supplier for GBP24.3 billion ($32
billion).
Turkish coup attempt: Turkey was rocked late Friday by a bid by
the country's military to seize power.
However, Turkey's government reasserted control over the
weekend, and the military declared the coup over. Nearly 300 people
were killed in clashes across the country, including at least 104
alleged plotters, according to media reports.
The Recep Tayyip Erdogan-led government is now widening its
crackdown against suspects
(http://www.marketwatch.com/story/6000-arrested-as-turkey-declares-coup-attempt-over-2016-07-17).
So far, 6,000 people have been arrested, including the former head
of Turkey's air force and the Turkish commander of a joint
U.S.-Turkish air base used by U.S. aircraft to launch strikes
against Islamic State.
The Turkish lira sold off as the coup attempt got under way on
Friday evening, but recovered most of the ground lost on Monday
(http://www.marketwatch.com/story/turkish-lira-and-euro-rise-shaking-off-coup-jitters-2016-07-18).
Other markets: Stocks in Asia also largely shrugged off the
unrest in Turkey, with most markets closing higher
(http://www.marketwatch.com/story/china-stocks-struggle-after-last-weeks-growth-data-2016-07-18).
Japan's markets were closed for a holiday.
In Europe, it was also mostly an upbeat trading day, with the
U.K.'s FTSE 100 index
(http://www.marketwatch.com/story/ftse-100-pulled-higher-as-arm-rallies-43-on-takeover-deal-2016-07-18)
among biggest advancers after the ARM Holdings-SoftBank deal.
Gold was flat, while the ICE dollar index edged lower.
(END) Dow Jones Newswires
July 18, 2016 11:53 ET (15:53 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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