Dow Closes at Record on the Back of Solid Quarterly Earnings

The major U.S. equity indexes closed mixed on Monday with the Dow closing at a record high and the S&P 500 and NASDAQ finishing lower. The Dow continued to be driven by solid earnings. According to FactSet, seventy-three percent of the S&P 500 companies that had reported as of Friday had topped estimates on both the top and bottom lines.

In the cash market, the bench mark S&P 500 Index settled at 2470.30, down 1.80 or -0.07%. The blue chip Dow Jones Industrial Average closed at 21891.12, up 60.81 or +0.28% and the tech-based NASDAQ Composite ended the session at 6346.44, down 28.24 or -0.44%.

The gains in the Dow were driven by strong performances by Goldman Sachs and Home Depot. Boeing also posted strong gains on the back of a big order from India. Traders also continued to react to the better-than-expected quarterly results posted last week.

Materials and information technology were the biggest drag on the S&P 500 Index. The NASDAQ Composite continue to feel pressure from weakness in stocks like Facebook and Google’s parent stock, Alphabet.

Besides the robust earnings, stocks were also being supported by relatively low U.S. Treasury yields and firmer crude oil prices. Investors primarily ignored the geopolitical events in North Korea and Venezuela.

Investors had little reaction to the news of the departure of White House communications director Anthony Scaramucci. The removal of Scaramucci by Trump was the cherry on top of a week that features little headway in President Trump’s attempt to repeal and replace Obama Care, implement tax reform, deregulate certain sectors of the economy and begin a program of increased infrastructure spending.

Economic News

Chicago PMI came in lower than expected to 58.9 and Pending Home Sales increased 1.5%, beating the 0.9% estimate and rising well-above the previous -0.7% read.

Crude Oil

U.S. West Texas Intermediate crude closed over the psychological $50 level on Monday for the first time since May 24. The futures contract ended up about 9 percent for the month, its best monthly performance since April 2016.

The market continued to be supported by declining U.S. crude stockpiles and Saudi Arabia’s pledge to cut oil exports in August. Additionally, traders may have been reacting to a potential cut in supply from Venezuela, which is expected to be slapped by U.S. sanctions.

Additionally, OPEC announced over the week-end that some members of the cartel, including top oil exporters Saudi Arabia and Russia will meet next week to discuss ways to improve compliance with a deal to limit output, trim the global supply and stabilize prices. Finally, U.S. shale producers have also begun reducing capital spending plans.

Gold

Gold prices rose to their highest level in almost seven weeks on Monday, boosted by a weaker U.S. Dollar, wavering U.S. economic data, and doubts as to whether the U.S. Federal Reserve will raise interest rates again this year. Profit-taking, however, put an end to the rally and the market finished marginally lower for the session.

Besides the weaker dollar, which plunged after the news of Anthony Scaramucci’s ousting by the President, gold traders also reacted positively to lower Treasury yields, a mixed stock market, political uncertainty over Trump’s ability to implement his economic agenda and increasing worries over the stability in North Korea.