Market Snapshot: Stocks rally; Dow set for first close above key level in more than a month

U.S. stocks rallied on Monday, with major indexes gaining 1% as optimism persisted over the first-quarter earnings season and as geopolitical tensions showed signs of fading.

Need to know: This jumpy stock market may have found a bottom—here’s why

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, +1.12%  rose 310 points, or 1.3%, to 24,671. The blue-chip average climbed above its 50-day moving average, a level it hasn’t breached since March 13, and which it hasn’t closed above since March 9. The level is a closely watched gauge of short-term momentum, and closing above it could suggest a corner has been turned in terms of sentiment.

The S&P 500 SPX, +0.98%  added 29 points to 2,685, a rise of 1.1%. While the benchmark index remained a few points below its own 50-day moving average, it returned to positive territory for the year and was set for its highest close since March 22.

The Nasdaq Composite Index COMP, +0.84%  rose 67 points, or 1%, to 7,173.

Gains were broad-based, with all 11 primary S&P 500 sectors higher on the day and eight of them rising at least 1%. The Cboe Volatility Index VIX, -5.51%  fell 5% and was on track for its lowest close in about a month.

What’s driving markets

Geopolitical issues remain in focus after the U.S. joined with France and Britain to launch missiles that destroyed much of Syria’s chemical-weapons capabilities on Saturday. The strikes left much of President Bashar al-Assad’s conventional military facilities intact, which may ease fears of an escalation in tensions with Russia, a backer of Syria’s regime.

Corporate earnings are likely to be more important for investors, however. A number of bellwether names, including Netflix Inc. NFLX, -1.77% and General Electric Co. GE, -1.52% are scheduled to report in the coming days, joining Bank of America, which reported early Monday.

According to FactSet, earnings for companies in the S&P 500 are expected to grow 17.3% in the first quarter, while sales grow 10%. For both, such rates would represent the fastest pace of growth since the first quarter of 2011.

Read: Netflix earnings: Another ‘beautiful quarter,’ or are subscriber expectations too high?

Which stocks are in focus?

Bank of America Corp. BAC, +1.04% rose 0.6% after beating profit and revenue expectations. The results follow JPMorgan Chase & Co. JPM, +0.59% Citigroup Inc. C, -0.44%  and Wells Fargo & Co. WFC, +0.44% all of which lost ground Friday even after posting earnings that were either in line with forecasts or better than expected. Some say that could be due to concerns that earnings growth has peaked.

The financial sector rose 0.8% on Monday.

And: Tax cuts were supposed to juice the economy, but banks aren’t seeing it

Merck & Co. MRK, +2.13%  gained 2.4% after it released late-stage results showing that a cancer drug combination using its Keytruda reduced patients’ risk of death by half, a significant improvement. The stock was one of the biggest boosts to the Dow.

U.S.-listed shares of WPP PLC WPP, -5.24%  fell 5.4% after Chief Executive Officer Martin Sorrell resigned over a probe into an allegation of personal misconduct.

Icahn Enterprises L.P. IEP, +0.39%  rose 0.8% after announcing its majority-owned Tropicana Entertainment Inc. had entered a deal to sell its real estate to Gaming and Leisure Properties Inc. GLPI, +4.27%  for $1.85 billion. It will also merge its gaming and hotel business into Eldorado Resorts Inc. ERI, +16.11% Shares of Eldorado jumped 6% in premarket trading.

Alkermes PLC ALKS, +2.94%  jumped 3% after the Food and Drug Administration accepted the biopharmaceutical firm’s new drug application for its treatment for depression.

MoviePass majority owner Helios & Matheson Analytics Inc. HMNY, +8.40%  rallied 3% in premarket trading, extending a gain that started after Verizon Communications Inc. VZ, +1.32% disclosed a large equity stake in the company.

Navistar International Corp. NAV, +10.39%  rose 11% after Volkswagen AG’s commercial-vehicles business said it is considering increasing its stake in the U.S. truck company to more than 17%.

NewLink Genetics Corp. NLNK, -7.38%  tumbled 7.8% after the company said it won’t proceed as planned with a late-stage trial of its indoximod drug for advanced melanoma.

What are analysts saying?

“With trade headlines dying down, for now, the market still closer to the lower end of our target valuation range, and likely continued earnings momentum ahead, we remain tactically bullish,” wrote Michael Wilson, chief U.S. equity strategist at Morgan Stanley. “We think first-quarter earnings season should deliver on high expectations and help the market move higher toward a cyclical top in equities we expect to occur later this year.”

What is on the economic docket?

Sales at U.S. retailers rose 0.6% in March to end a streak of three straight declines, the Commerce Department reported Monday, underscoring the improved financial picture of American households and the resiliency of an economic expansion that could turn out to be the longest ever.

Separately, the Empire State manufacturing index gave up most of the gains in April that it saw in the prior month, the New York Fed said Monday. The index slipped to a reading of 15.8 in April from 22.5 in March.

Read: Americans are spending again after lying low for a few months

Meanwhile, Minneapolis Fed President Neel Kashkari, in an interview with The Wall Street Journal published Monday, said he expects inflation will soon hit the central bank’s 2% target, making it easier to push on with interest-rate hiking plans.

What are other markets doing?

Asian markets surrendered much of an early lead, led by falls for China and Hong Kong. European stocks SXXP, -0.39% edged lower.

Read: These cheap European stocks yield up to 8.1%

Gold futures GCM8, +0.16% GCM8, +0.16% inched lower, while the ICE U.S. Dollar Index DXY, -0.42% DXY, -0.42% lost ground. Oil prices CLK8, -1.42% pulled back as Syria worries eased somewhat and investors cashed in on some of last week’s big gains.

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