By Yasin Ebrahim
Investing.com – The S&P 500 hit a fresh record high Monday, led by financials as investors piled into banking stocks ahead of their earnings later this week.
The S&P 500 rose 0.3% to a record high of 4,384.90. The Dow Jones Industrial Average was up 0.31%, or 107 points, the Nasdaq was up 0.08%.
A slew of major Wall Street banks are set to kick off the quarterly earnings season in earnest this week, with JPMorgan Chase&Co (NYSE:JPM) and Goldman Sachs (NYSE:GS) reporting earnings on Tuesday.
The second-quarter wasn't a particularly good quarter for banks against a backdrop of falling interest rates and subdued loan demand compared with a year earlier as consumers are awash with cash.
“For this quarter [Q2], I don't think the banks are going to report substantial loan growth this quarter, at least from the numbers that we're looking at that's put out by the St. Louis Fed,” George Cipolloni a portfolio manager of Penn Mutual Asset Management said in an interview with Investing.com on Monday. “The market might like the announcement of share repurchase from the banks, which could help support the banks through this quarter, even though I don't think we'll get loan growth yet," he added.
Any guidance from banks that points to improving net loan to deposit growth will be a key driver to boost investor appetite on banks. “If that dynamic were to change, that would be great for GDP, it would support inflation and higher yields, Cipolloni added. if we see a change net loan to deposit ratio, we'd be very happy with that particular outcome regarding banks,” Cipolloni added.
The bid up in financials and other cyclical stocks appeared to come at the expense of the broader growth sector as tech pared some its gains, though remained in the green thanks to a climb in semiconductor stocks.
NVIDIA Corporation (NASDAQ:NVDA), Lam Research Corp (NASDAQ:LRCX) and ASML Holding NV ADR (NASDAQ:ASML) were among the top gainers with latter up more than 2%.
Megacap tech, meanwhile, traded mostly lower.
Microsoft (NASDAQ:MSFT, Apple (NASDAQ:AAPL) and Amazon.com (NASDAQ:AMZN) were lower, while Facebook (NASDAQ:FB) and Google-parent Alphabet (NASDAQ:GOOGL) were above the flatline.
On the economic front, this week is set to be a market-moving week, with the release of inflation data on Tuesday, and Federal Reserve Chairman Jerome Powell set to take stand before Congress on Wednesday.
Musk tells court he dislikes being Tesla CEO as SolarCity trial opens
GM turns to supplier to build initial EV vans while it readies plant in Canada