NEW YORK - Optimism over corporate earnings sent the stock market higher Monday.
U.S. companies start reporting their second-quarter results this week, led by aluminum producer Alcoa, the first company in the Dow Jones industrial average to announce results. Other major companies reporting include JPMorgan and Wells Fargo.
The Dow rose 88.85 points, or 0.6 percent, to close at 15,224.69. The Standard & Poor’s 500 index gained 8.57 points, or 0.5 percent, to end at 1,640.46. The Nasdaq composite rose 5.45, or 0.2 percent, to 3,484.83, the smallest gain of the major indexes.
Analysts predict that earnings growth for companies in the Standard & Poor’s 500 index rose 3 percent in the second quarter. Although growth is down from 5 percent in the first quarter, earnings are still expected to reach record levels.
Investors and traders will search for evidence that companies are increasing revenue, not just cutting costs to increase profits. Sales growth is predicted to fall 0.3 percent in the second quarter.
“We’ll be looking to see where revenue comes in,” said Jim Dunigan, an executive vice president of investments at PNC.
After the market closed Monday, Alcoa reported a wider second-quarter loss because of weak aluminum prices.
Alcoa lost $119 million, or 11 cents per share, in the April through-June quarter. That’s compared with a loss of $2 million, or break-even on a per-share basis, a year earlier.
Dell was among the big gainers in the S&P 500 index. An advisory firm recommended that company shareholders support a plan to take the computer company private. Founder Michael Dell and Silver Lake Partners have offered to buy Dell for $24.4 billion, or $13.65 a share. Dell rose 41 cents, or 3.1 percent, to $13.44.
The Russell 2000 index, which tracks small-company stocks, closed at an all-time high 1,009.25. The index passed the 1,000 mark for the first time Friday and has gained 18.8 percent this year, a sign that investors are more willing to take on risk.
The Nasdaq was weighed down by a slump in Intel. The chip maker fell after a Citigroup analyst wrote that weak personal computer sales and waning demand for smartphones would stunt the company’s growth. Intel, which makes up 2.2 percent of the Nasdaq, fell 88 cents, or 3.6 percent, to $23.18.
Other chip makers also declined. Qualcomm dropped 96 cents, or 1.6 percent, to $59.99.
In government bond trading, the yield on the 10-year government note pulled back from a two-year high of 2.74 percent Friday. It fell to 2.64 percent on Monday.
The yield had jumped after the government reported strong U.S. hiring for June on Friday. Investors believe that the improving jobs market will prompt the Federal Reserve to ease back on its bond-buying program. The Fed is buying $85 billion in bonds each month to keep interest rates low and spur borrowing and investing.
Bond investors pulled a net $900 million from U.S. stock funds for the week ending June 26, but they withdrew $28.1 billion from bond funds over the same period, according to data from the Investment Company Institute.
That sell-off might help stocks as investors look to reinvest their proceeds from bonds.
Business, Pages 24 on 07/09/2013