The three major averages closed at record highs as investors looked ahead to the quarterly earnings from major banks as catalyst for further direction.
The S&P 500 climbed 0.4% to close at a record of 4,384.63. The Dow Jones Industrial Average was up 0.4%, or 126 points to a record close, just shy of the 35,000 level, while the Nasdaq gained 0.2% to new closing record of 14,733.24.
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.
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.
In tech, semiconductor names helped keep the broader the sector above water following weakness in some of the megacap tech names.
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%.
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.
In vaccine news, Johnson & Johnson (NYSE:JNJ)came under pressure on reports the Food & Drug Administration plan to warn that the pharma giant's Covid-19 vaccine is linked to a low risk of neurological disorder.
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.
Still, some warn the influx of incoming economic and corporate data as well as potential clues on monetary policy could spark volatile into life. "Whether it is from a change in the Fed policy decision or whether it's because valuations are so high and earnings can't keep up, I think we get a spike in volatility in the short term," Cipolloni said.