NEW YORK (Reuters) - The benchmark U.S. S&P 500 index and the Nasdaq index rose on Monday as a jump in 10-year bond yields boosted financial sector stocks and investors anticipated continued strength in corporate earnings and U.S. economic growth.
The financial sector stock index .SPSY rose 1.3 percent after 10-year U.S. Treasury yields climbed to their highest level in five weeks. The Federal Reserve was seen as likely to continue raising interest rates despite criticism from President Donald Trump.
“Yields are climbing across the board, which is a sign of a strengthening economy,” said Oliver Pursche, chief market strategist at Bruderman Asset Management in New York. “And earnings have been very strong.”
Analysts now forecast profit growth of about 22 percent for the second-quarter earnings season, up from 20.7 percent at the start of the month, according to Thomson Reuters I/B/E/S.
News of ongoing trade talks helped U.S. stocks edge upward. Mexican President-elect Andres Manuel Lopez Obrador sent Trump a letter urging a quick wrap-up of NAFTA trade negotiations, and trade officials from Mexico and the United States will meet later this week.
Also, European Commission President Jean-Claude Juncker is scheduled to meet with Trump on Wednesday over the imposition of import tariffs, though he will not arrive in Washington with a specific trade offer.
The Dow Jones Industrial Average .DJI fell 13.83 points, or 0.06 percent, to 25,044.29, the S&P 500 .SPX gained 5.15 points, or 0.18 percent, to 2,806.98 and the Nasdaq Composite .IXIC added 21.68 points, or 0.28 percent, to 7,841.87.
But some investors worried about the effects of international trade tensions on the U.S. dollar, which has climbed in recent months. Several U.S. multinationals are reevaluating their currency hedging strategies.
Shares of Illinois Tool Works Inc (ITW.N) fell 7.2 percent, contributing to the S&P 500 industrial sector’s .SPLRCI 0.6 percent decline. The machinery parts maker cut its full-year earnings forecast, joining Netflix Inc (NFLX.O) in blaming the strong dollar for the cut.
Amazon.com Inc (AMZN.O) slipped 0.6 percent and was the biggest drag on the Nasdaq and the S&P 500 after Trump renewed his attacks on the retailer.
Shares of Alphabet Inc (GOOGL.O) rose more than 4.0 percent in after-hours trading after the internet giant reported quarterly results.
Hasbro Inc (HAS.O) shares jumped 12.9 percent, the most in the S&P 500, after posting upbeat results. Rival Mattel Inc gained 3.9 percent.
Tesla Inc (TSLA.O) shares fell 3.3 percent after a report that the company has asked some suppliers to refund previous payments by the company in a bid to turn a profit.
Shares of oilfield services provider Halliburton Co (HAL.N) sank 8.1 percent as investors focused on growing pipeline constraints in the Permian Basin.
LifePoint Health Inc (LPNT.O) shares soared 35.5 percent and lifted shares of hospital operators after the company agreed to be bought by Apollo Global Management (APO.N) in a deal valued at about $5.6 billion.
Declining issues outnumbered advancing ones on the NYSE by a 1.38-to-1 ratio; on Nasdaq, a 1.06-to-1 ratio favored decliners.
The S&P 500 posted 27 new 52-week highs and six new lows; the Nasdaq Composite recorded 112 new highs and 53 new lows.
Volume on U.S. exchanges was 5.50 billion shares, compared to the 6.16 billion average for the full session over the last 20 trading days.
Reporting by April Joyner; Additional reporting by Amy Caren Daniel in Bengaluru; Editing by Shounak Dasgupta and Clive McKeef