US stocks: S&P 500, Nasdaq, close slightly up in cautious start to a heavy earnings week

The S&P 500 and the Nasdaq eked out modest gains on Monday in muted trading, as investors took a breath at the top of an eventful week, with earnings, economic data, the U.S. Federal Reserve’s rate decision and the ebb and flow of Middle East tensions all crowding the docket.

All three major U.S. stock indexes wavered throughout the session, showing little conviction in ‌either direction after last ⁠week’s rally ⁠sent the S&P 500 and the Nasdaq to a series of record closing highs.

The session began with the S&P 500 up over 100% since the bull market began in October 2022.

“The market is just trying to deal with the rally that’s been going on and digest the latest all-time highs that we’ve made on the indices,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut. “And it’s trying to figure out whether or not those all-time highs are justified.”

First-quarter earnings season has hit full stride, with a host of high-profile firms slated to report this week, including five of the Magnificent Seven technology ⁠megacaps, Amazon , ‌Alphabet, Meta Platforms, Apple and Microsoft. Investors will assess the extent to which these companies are beginning to reap benefits of massive expenditures on artificial intelligence.

As of Friday, 139 companies in the S&P 500 have posted first-quarter ⁠results. Of those, 81% have beaten estimates. Analysts now see aggregate S&P 500 earnings growth of 16.1% year-on-year, up from 14.4% on April 1, according to LSEG I/B/E/S. The companies due to report this week account for roughly 44% of the S&P 500’s market capitalization, according to Raymond James. “Guidance has been pretty good. We’re seeing earnings growth of 15%, and I would classify that as a very good environment, except the road has gotten a lot more bumpy,” Pavlik added, referring to geopolitical tensions in the Middle East.

Attempts to revive peace talks between the U.S. and Iran continue following President Donald Trump’s decision to call off negotiators’ trip to Islamabad for another round ‌of face-to-face talks. Iran continues to restrict shipments through the Strait of Hormuz, with Iranian officials demanding that Washington lift its blockade as a precondition to further negotiation.

On Tuesday, the Federal Reserve is scheduled to convene for its two-day policy meeting, widely expected to ⁠culminate in the decision to leave interest rates unchanged. The accompanying statement and Fed Chair Jerome Powell’s press conference will be scrutinized for clues regarding the central bank’s assessment of U.S. economic health and the inflationary impact of spiking energy prices resulting from the U.S.-Israeli war on Iran.

According to preliminary data, the S&P 500 gained 8.93 points, or 0.12%, to end at 7,174.01 points, while the Nasdaq Composite gained 49.78 points, or 0.20%, to 24,886.38. The Dow Jones Industrial Average fell 57.82 points, or 0.12%, to 49,172.89.

Verizon advanced following the telecom company’s annual forecast hike due to stronger-than-expected subscriber adds.

Domino’s Pizza slid after the pizza chain missed first-quarter sales estimates.

Nvidia extended the prior session’s 4.3% surge. The company has reclaimed a market valuation of more than $5 trillion.