On Monday, US stock indexes recorded gains after profit expectations of big banks beat expectations, thereby giving an extension to the positive momentum of the previous week. Moreover, bets over the magnitude of interest rate hikes from the US Federal Reserve also eased.

Stronger earnings

There was a 2.5% gain in Goldman Sachs Group Inc., as its slump in the second quarter profit stood at 48%, which was lower than expected. This was primarily because of its fixed-income trading support. Likewise, a 0.4% gain was also recorded in Bank of America shares, after it exceeded analysts’ expectations for quarterly profit.

Gains in banking shares also gave a 0.6% boost to the S&P 500 bank index, as the second quarter earnings season appears to be a mixed one. This is because market volatility helped trading operations flourish and this was helpful in balancing the weakness seen in the investment banking sector.

Market analysts said that investors were trying to determine if all the bad news is done, which would make this an excellent time to make their entry.

Index gains

There was a 0.48% gain in the Dow Jones Industrial Average at 12 44 p.m. ET, which saw it increase by 149.36 points to 31,437.62. A 0.74% advancement was seen in the S&P 500 index which took it up by 28.58 points to 3,891.74. Meanwhile, the Nasdaq Composite appreciated by 1.38%, which is a gain of 157.69 points that took it to 11,610.11.

There was also a 1.2% gain in the S&P 500 tech index, as there was a 6.2% advancement in the shares of chipmaker Nvidia Corp. Concerns about a super-sized interest rate hike from the US Fed at the policy meeting in July also eased after Fed officials remarked in the previous week that they wanted to stick to a hike of 75 basis points.

Next week

Big technology companies are scheduled to post their earnings next week and these will be closely watched. This was because the companies have seen their shares under selling pressure for the better part of the year.

Market analysts said that growth stocks were expected to perform better in the second half of the year, with interest rates peaking and some disappointment in value stocks. Moreover, they said that it was important to note that the US Fed could pivot really quickly and start easing in the first half of the next year.

Now that the earnings season has begun, analysts are expecting second-quarter growth in profits of S&P 500 companies to be around 6%. This is down from the previous estimate of 6.8%. There was also a 2.5% rise in the S&P 500 energy index, as there was an increase of $4 in crude prices.

Amongst individual shares, there was a 2.1% rise in Boeing Co after the announcement from Delta Air Lines Inc. regarding the purchase of 100 MAX 10 jets valued at $13.5 billion and keeping the option of buying another 30 open. Delta also saw its shares rise by 5.9%.