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Stocks Poised to Extend Gains Ahead of Earnings Parade

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It’s hard to keep stocks down in this bull market. After tumbling on Thursday, the major indices came back with a vengeance on Friday to finish the week at record levels. Investors had shown concern about the economic recovery hitting a stumbling block, but their fears didn’t last.

On Friday, the S&P 500, Dow Jones Industrial Average and Nasdaq all finished the day at fresh all-time highs. Bank stocks reclaimed lost ground from Thursday’s sell-off while travel stocks including airlines also made a quick turnaround.

Trading in stock index futures suggests that Monday will extend Friday’s gains. On Sunday evening, the S&P 500, Dow and Nasdaq index futures were all trading fractionally higher.

Stocks to Watch

The second-quarter earnings parade will begin in earnest this week on Tuesday. Financial services is among the first sectors to report, with Goldman Sachs and JPMorgan in the pipeline, in addition to consumer company PepsiCo. A Cowen & Co. analyst reiterated her outperform rating on PepsiCo shares in recent days.

The economy has been humming along even better than had been anticipated since the pandemic year. The expectations for S&P 500 companies this earnings season are bullish. Profits are poised to increase 65% vs. year-ago levels, as per Refinitive data, a sign that the pandemic pressure is seemingly in the rearview mirror.

Meme stocks bucked the bullish trend on Friday, though. Barron’s seems to think the meme-stock rally has more fuel left in the tank, based on its latest cover.

AMC Entertainment shaved nearly 4% off its value, while GameStop was down fractionally. Investors also appeared to take some profits in Virgin Galactic, which fell nearly 7% on Friday after Thursday’s blockbuster trading session.

Virgin Galactic is still up approximately 14% in the month of July so far. Richard Branson launched into space on Sunday along with a full crew and returned to Earth without a hitch. Now that space tourism is becoming a reality, demand for Virgin Galactic could potentially increase, though analysts are divided about the stock.

Look Ahead

Investors will be looking to gauge how inflation is looking in the economy when the Consumer Price Index comes out on July 13. Wells Fargo economists are expecting an increase of 0.6% for a 5% YoY rate.

This article was originally posted on FX Empire