U.S. stocks soared to new heights as the busiest week of earnings season kicked into gear, buoying anxious investors who are anticipating key news on jobs and interest rates this week.

The Standard & Poor’s 500 index closed at 3,039, up almost 0.6%, eclipsing the broad market’s previous high of 3,025 from July 26.

The Dow Jones industrial average and Nasdaq Composite were close behind, sending stocks upward in what is historically a bumpy month for markets. The Dow closed at 27,090, up about 0.6% on the day. The Dow is short about 1% from its record close of 27,359, set July 15. The tech-rich Nasdaq closed at 8,325, up 1% but short of its all-time high of 8,330 from July 26.

All three indexes are racing toward finishing October on the upside.

The tenor of the earnings season, so far, has bucked worries about corporations underperforming, with technology leading the way on upbeat reports from Microsoft, Intel and AT&T. The new economy fueled markets despite last week’s downbeat forecast from industrial bellwether Caterpillar, and big misses by Wells Fargo and Goldman Sachs.

“Despite some high-profile misses, earnings season has been generally positive,” said Kristina Hooper, global market strategist at Invesco. “It’s no surprise stocks have reached a new sugar high.”

The rest of the week is crowded with financial news, including a possible interest rate cut on Wednesday from the Federal Reserve and the highly anticipated jobs report from the U.S. Labor Department on Friday. Hiring, unemployment and wages are closely followed as ground-level indicators of the economy’s health.

The next several days are stacked with earnings results, too, any few of which could rain on the bullish parade.

Tuesday’s health care trifecta of Amgen, Merck & Co. and Pfizer leads the way. Millennial household names Apple, Starbucks, Lyft and Facebook all land on Wednesday. Closely followed General Electric, Mastercard, Bristol-Myers, Altria Group, Mondelez, Big Oil and others are sprinkled throughout the rest of the week.

The earnings surprises are feeding into a generally happy outlook on U.S.-China trade after months of pessimism. Stocks are also getting a positive rub from the belief that an accommodating Federal Reserve will keep the decade-long expansion in high gear with another interest rate cut.

“Optimism is hitting investors from all directions,” said Charlie Ripley, investment strategist at Allianz Investment Management. “On one side, there appears to be further progress on the first phase of a trade deal with China as both sides are on track to sign an agreement at an upcoming meeting in Chile next month. On another, we have a supportive Fed.”

Seven of 11 stock market sectors were in positive territory Monday. The down sectors were so-called safe harbors such as utilities and real estate, an indication that investors were willing make riskier bets that the economy was still on an upward trajectory with more good days ahead.

Microsoft, Goldman Sachs, bellwether 3M and Pfizer were the big Dow leaders. Microsoft – which has been trading places with Apple for the most valuable company in the U.S. – was up 2.5% after beating out rival Amazon over the weekend for a $10 billion cloud computing services contract from the federal government.

Of the 202 S&P 500 companies that reported earnings through Monday morning, 156 or 77.2%, had beaten analyst estimates, according to Howard Silverblatt of S&P Dow Jones Indices.

“That’s a high beat rate,” Silverblatt said. “Historically, the beat rate is 67%.”

Silverblatt said the reason companies are coming in above expectations is because analysts had expected the economy to slow, resulting in lower profits. He said specifically that third-quarter earnings estimates were reduced 9% compared to where they stood at year end 2018.

“Companies have beaten the lowered estimates three quarters in a row,” Silverblatt said. “Going into the quarter, there was expectations of a slower economy, more trade difficulties and a less cooperative Federal Reserve.”

Oil prices dipped on news that China’s economy continues to slow down. Futures prices for U.S. benchmark West Texas Intermediate oil fell more than 1% to $55.71 Monday afternoon. Brent crude was down 1.4% to $61.14.

Gasoline prices cooperated, with the national average price at the pump dropping by four cents to $2.60. That’s down 21 cents from a year ago, according to AAA. Lower gasoline prices are seen as an economic boon to average citizens because it puts more money directly into their pocket. With the holiday season approaching, lower gas prices could have a ripple effect through many industries.

 

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