MRK Merck and Co Inc

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)

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