By Wallace Witkowski, MarketWatch , Ryan Vlastelica
Macy's, Kohl's leading consumer-discretionary gains
U.S. stocks struggled to push higher Monday, with major indexes trading at or near record levels as investors looked toward key quarterly results that will be released this week to set the tone.
The Dow Jones Industrial Average rose 3 points to 21,641, following an all-time closing high on Friday. Shares of Home Depot Inc. (>> Home Depot (The)) and Procter & Gamble Co.(>> Procter & Gamble Company) led the average higher.
The S&P 500 , which also ended at a record Friday, inched up less than a point to 2,459.
Seven of the 11 primary S&P 500 sectors rose on the day, with health care leading decliners with a 0.2% dip. The sector leading gainers was consumer discretionary, up 0.4%, with traditional retailers showing signs of life as shares of Macy's Inc. (M) and Kohl's Corp.(>> Kohl's Corporation) both advanced more than 3% as some have noted insiders at retailers are starting to buy up shares . For the year, Macy's is down 35%, and Kohl's is down 19%.
The Nasdaq Composite Index dipped 4 points to 6,308. The Nasdaq's last record close was on June 8, when it finished at 6,321.76.
Need to know:Investors should pay attention to this 'chart of the week, month and potentially year'
Whether stocks can extend further into record territory hinges partly on the outcome for earnings, with investors looking for signs that valuations are justified by the strength of corporate results, particularly given doubts about Washington's ability to deliver a roster of Wall Street-friendly legislations.
Some 68 S&P 500 companies will report this week, according to FactSet. Those include Bank of America Corp.(>> Bank of America), Goldman Sachs Group Inc.(>> Goldman Sachs Group), Microsoft Corp.(>> Microsoft Corporation) and General Electric Co.(>> General Electric Company).
Those last three are likely to give a "nice flavor" of what to expect this earnings season, said J.J. Kinahan, chief strategist at TD Ameritrade, in an interview.
Goldman is likely to be a wild card in that it derives the bulk of its revenue from trading, which has been on the light side this past quarter, while Microsoft and GE will give a preview of global growth trends from tech and industrials, respectively, Kinahan said. But on the whole, investors have become a little more cautious heading into earnings, he said.
"No one likes or respects all-time highs in stocks, and earnings drive the market," Kinahan said. "Expectations have been tempered over the past week or two, especially with a stalling legislative agenda, but there's cautious optimism with good, not great, numbers."
What will give stocks a push higher: While earnings are important, tax legislation remains the most important political issue for U.S. stocks, said Michael J. Wilson, equity strategist at Morgan Stanley, in a note to clients on Monday.
He said equity multiples must expand again for the S&P 500 to reach their 2017 target of 2,700, but the catalyst on that expansion would likely be "more policy 'certainty' rather than the outcome itself.
"No matter what gets passed in the next few months, we think just moving forward with a decision on the Affordable Care Act and taxes will provide the certainty necessary for companies and individuals to 'act' on their higher confidence readings which have remained elevated," said Wilson.
On the economic-data front, the New York Fed's Empire State manufacturing index fell to a seasonally adjusted reading of 9.8 from 19.8 in June. Analysts were looking for a reading of 15.
Stocks to watch: Shares of investment manager BlackRock Inc.(>> BlackRock) slipped 3.1% after reporting a profit and sales miss , despite massive inflows into its low-fee exchange-traded funds.
Streaming giant Netflix Inc.(>> Netflix) is due to report its results after the close. The stock was up 0.4%. Read a Netflix earnings preview here .
Shares of J.B. Hunt Transport Services Inc.(>> JB Hunt Transport Services) gained 2.3% despite posting a profit that was below expectations .
Blue Apron Holdings Inc. tumbled 12% after Amazon.com Inc.(>> Amazon.com) filed a trademark for a meal kit service, suggesting the newly public company could face competition from the retail giant--a scenario that was already been spooking Blue Apron investors with its proposed acquisition of Whole Foods Market Inc.(>> Whole Foods Market, Inc.).
Other markets: In China, the Shanghai Composite Index closed down 1.4% , but off earlier lows as data showed expansion in the world's second-biggest economy that beat forecasts with 6.9% second-quarter growth . Helping to spark the selling, Chinese officials at a financial conference hinted at tighter controls on the economy.
Opinion:China is playing a weak hand with the U.S .
European stocks closed slightly higher, with the FTSE 100 index gaining but Germany's DAX 30 falling.
Oil prices slipped 0.9% while gold futures settled 0.5% higher at $1,233.70 an ounce. The dollar was slightly lower. Meanwhile, the benchmark 10-year Treasury note yield was down 2 basis points at 2.314%.
--Barbara Kollmeyer in Madrid contributed to this report.
Stocks mentioned in the article : Home Depot (The)
, Microsoft Corporation
, Kohl's Corporation
, JB Hunt Transport Services
, Whole Foods Market, Inc.
, Procter & Gamble Company
, Bank of America
, Goldman Sachs Group
, General Electric Company