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MARKET SNAPSHOT: Stock Market Ticks Higher As Investors Await Earnings Deluge

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07/17/2017 | 07:58pm CET

By Wallace Witkowski, MarketWatch , Ryan Vlastelica

Blue Apron tumbles after Amazon files a trademark for a meal kit service

U.S. stocks advanced cautiously on Monday, with major indexes trading at or near record levels as investors looked ahead to key quarterly results that will be released this week. Corporate quarterly results may help to shed light on whether current levels are justified by economic activity at American corporations.

The Dow Jones Industrial Average rose 12 points, or less than 0.1%, to 21,650, following an all-time closing high on Friday.

The S&P 500 , which also ended at a record Friday, inched up by 2 points to 2,461. Ten of the 11 primary S&P 500 sectors rose on the day, with the only decliner being health care, down less than 0.1%. The biggest gainers on the day were materials, up 0.3%, and consumer discretionary, up 0.4%.

The Nasdaq Composite Index rose 5 points to 6,318, a gain of nearly 0.1%. 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'

While daily moves remain modest, they've largely trended to the upside. 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.

The latest economic data was cautious, with the New York Fed's Empire State manufacturing index falling to a seasonally adjusted reading of 9.8 from 19.8 in June. Analysts were looking for a reading of 15.

Stocks to watch: 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 and the stock was up 0.4% at last check. Read a Netflix 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 retail giant that has already been spooking Blue Apron's investors with its proposed acquisition of Whole Foods Market Inc.(>> Whole Foods Market, Inc.).

Traditional retailers were showing signs of life with shares of Macy's Inc. (M) and Kohl's Corp.(>> Kohl's Corporation) both trading up more than 3% as some have noted insiders at retailers are starting to buy up shares .

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 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.

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