Stocks are closing solidly higher Monday as investors cheer a strong dose of positive earnings reports as well as economic data that showed the U.S. economy is growing. Shares of clothing retailer Gap Inc. and flooring manufacturer Mohawk Industries both gained more than 7%. The Institute for Supply Management’s manufacturing index came in at 60.7, well above the 50-point mark that indicates manufacturing activity is expanding. Federal Reserve Chairman Jerome Powell said the economic outlook has “clearly brightened” in the United States, but the recovery remains too uneven.
THIS IS A BREAKING NEWS UPDATE. AP's earlier story appears below.
U.S. stocks were solidly higher in afternoon trading Monday, as investors cheered a strong dose of positive earnings reports as well as economic data that showed the economy is growing.
The S&P 500 index was up 0.5% as of 3 p.m. Eastern. The Dow Jones Industrial Average was up 297 points, or 0.9%, to 34,170, while the Nasdaq Composite was down 0.3% after shedding an early gain. The S&P is adding to its 5.2% gain from April, its best month since November 2020, when President Joe Biden was elected. It logged a gain of about 28% between November and April.
Among the biggest gainers on the first trading day of the month were clothing retailer Gap Inc., which jumped 11%, and flooring manufacturer Mohawk Industries, which soared 10.2%.
A mix of healthcare, industrial and financial stocks helped lift the market. Those gains offset a pullback in technology and communication stocks, and in companies that rely directly from consumer spending.
More than half of the companies in the S&P 500 have reported their results, which show earnings growth of 54% percent so far, according to FactSet.
“In terms of earnings, we're in a good place," said Hilary Kramer, chief investment officer for Kramer Capital Research. “The good news is that we're getting excellent guidance from these companies.”
Earnings have been solid, but the market still faces several key risks, she said, including a spike in COVID-19 cases in India shutting down manufacturing and commerce and hurting the global economic recovery, along with inflation concerns.
It's another busy week for earnings, with Merck, Pepsi, Colgate-Palmolive and CVS among the companies reporting their latest quarterly results. Investors will also get April’s jobs report on Friday.
Shares of Verizon Communications added 0.5% after the company announced it would sell off the remnants of Yahoo! and AOL into a new company backed by private equity firm Apollo Global Management. Verizon bought Yahoo and AOL's media assets about six years ago in an effort to compete with Google and Facebook, but the effort never panned out and Verizon returned its focus to its traditional wireless cell operations.
Warren Buffett's Berkshire Hathaway rose 2.2% after the billionaire investor named his successor after years of speculation. Greg Abel, who runs Berkshire Hathaway’s non-insurance business, will step into the CEO role when Buffett retires.
On the economic front, a report on U.S. manufacturing activity in April came in below economists' expectations, but still was strong for the month. The Institute for Supply Management's manufacturing index came in at 60.7 for April, compared with the 65.0 reading that was expected. However that figure is still well above the 50-point mark that indicates expanding manufacturing activity.
A report on U.S. construction spending showed similar results, making gains but still falling short of economists' forecasts. Spending on construction projects rose just 0.2% in March, the Commerce Department said Monday, significantly less than the 1.7% jump economists had expected.
The yield on the 10-year U.S. Treasury note slipped to 1.60% from 1.65% late Friday.