Wall Street rallies on China stimulus ahead of tech earnings
Wall Street ended sharply higher on Monday after China moved to stimulate its slowing economy while investors bought up technology stocks on cautious optimism on upcoming earnings reports.
In the second industry-wide cut in two months, China's central bank on Sunday reduced the amount of cash that banks must hold as reserves in a move to help spur lending and combat slowing economic growth.
A 2.28 percent rise in Apple Inc shares led the U.S. market higher, along with a 3.42 percent jump in IBM.
After the bell, IBM reported its 12th straight drop in quarterly revenue as it shed unprofitable businesses to focus on cloud-computing. The earnings exceeded low expectations, and IBM's shares edged down 0.17 percent in extended trade.
The Information Technology component of the S&P 500 closed up 1.79 percent on Monday.
The Dow Jones industrial average rose 208.63 points, or 1.17 percent, to end at 18,034.93, the S&P 500 gained 19.22 points, or 0.92 percent, to 2,100.4, and the Nasdaq Composite added 62.79 points, or 1.27 percent, to 4,994.60.
Other corporations reporting earnings this week include major technology names Facebook, Google, Qualcomm, Microsoft and Amazon.com.
The outlook for technology companies' profits has brightened modestly following results from Intel and Netflix last week and Check Point Software's report on Monday, which beat expectations. Its shares jumped 5.05 percent.
"People are thinking we've had three major tech companies do well, so maybe the others will do well also," said Donald Selkin, chief market strategist at National Securities in New York. "The danger is that when stocks rally ahead of an event, the bar gets set higher and it sets things up for disappointments."
Nearly 76 percent of the S&P 500 components that have reported results so far have beat s' earnings analyst expectations, topping the 70 percent average in the last four quarters. But just 47 percent beat on revenue, compared with the 58 percent average.
The quarterly results of U.S. multinationals have been hurt by unusual strength in the dollar, which was up 0.44 percent against a basket of major currencies on Monday and has gained 8 percent so far in 2015.
Hasbro jumped 12.55 percent after the toymaker reported a surprise increase in revenue. Royal Caribbean ended down 8 percent after it reported a fall in revenue, saying the strong dollar hurt spending on its cruise ships.
Despite lackluster U.S. economic data, a world grappling with slow growth and concern that both Greece and Ukraine could default on their debt, the U.S. stock market has been resilient - making it hard for short sellers. Major indexes are less than 2 percent below record highs.
Advancing issues outnumbered declining ones on the NYSE by 2,134 to 881, for a 2.42-to-1 ratio on the upside; on the Nasdaq, 1,882 issues rose and 877 fell for a 2.15-to-1 ratio favoring advancers.
The benchmark S&P 500 posted two new 52-week highs and one new low; the Nasdaq Composite recorded 37 new highs and 43 new lows.
About 5.6 billion shares changed hands on U.S. exchanges, below the 6.3 billion daily average for the month to date, according to BATS Global Markets.
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