NEW YORK (CNN/Money) -
U.S. stock markets rose Monday on bets that first-quarter earnings will be impressive and relief that terrorism concerns have moved into the background.
The Dow Jones industrial average (up 73.53 to 10515.56, Charts) added 0.7 percent, the Standard & Poor's 500 (up 5.88 to 1145.20, Charts) index added 0.5 percent and the Nasdaq composite (up 12.60 to 2065.48, Charts) gained 0.6 percent.
Commodities prices rallied and the dollar was mostly weaker versus other major currencies. Volume was very light, implying to some market watchers that the session's rally was fairly half-hearted.
U.S. stock and bond markets were closed for Good Friday and some market watchers had feared that the Easter weekend would bring a new round of geopolitical woes and possibly another terrorist attack. But with the weekend concluding quietly, investors returned Monday focused on the earnings.
"With so few negative pre-announcements, many of the earnings should meet or exceed expectations," said Mark Bryant, senior vice president at Brean, Murray & Co. "So it's what is in the forecasts that will determine the market direction."
First-quarter earnings are expected to be strong, with analysts surveyed by First Call looking for gains of 17 percent versus the same period a year earlier, although those analysts say that the gains could be as much as 20 percent, if not more. Financial, technology and airline companies dominate this week's earnings reports. (For an in-depth look at this week's results, click here.
"Financial companies earnings are key in terms of interest rates, when they see rates rising and how they are planning to position themselves to prepare for that," said Sarat Sethi, a portfolio manger at Douglas C. Lane & Associates. "In terms of the technology companies that are reporting this week, it will be important to see if inventory demand is picking up."
After the close, chipmaker Novellus Systems (NVLS: Research, Estimates) reported first-quarter earnings of 12 cents per share, up from a year earlier and more than what analysts were expecting, on revenue that rose 40 percent from a year earlier. Strong demand in the quarter led to the rise, and will fuel a continued rise in profit in the current quarter, the company said, all of which was a good start to the technology earnings period, analysts said. Novellus shares rose in after-hours trade.
Johnson & Johnson (JNJ: Research, Estimates), Merrill Lynch (MER: Research, Estimates) and Dow Jones (DJ: Research, Estimates) all report results before the bell Tuesday, but the day's biggest earnings report comes from Intel (INTC: Research, Estimates) after the close. The company is expected to have earned 27 cents per share, according to First Call forecasts, up from 14 cents a year earlier.
Economic reports on retail sales and business inventories are also due Tuesday.
What moved?
A number of security-related firms as well as more speculative technology stocks lifted the Nasdaq Monday.
Verifying that geopolitical worries remain in focus, all kinds of companies that make security products rallied. Among the movers, software maker IPIX (IPIX: up $6.66 to $22.16, Research, Estimates) gained 43 percent and topped the Nasdaq's most-actives list, security products maker Mace Security International (MACE: up $4.95 to $8.00, Research, Estimates) gained 162 percent and surveillance products maker Digital Record (TBUS: up $5.46 to $14.07, Research, Estimates) gained 63 percent.
Intel (INTC: up $0.23 to $27.60, Research, Estimates) was the Nasdaq's third most active, one session ahead of its expected earnings release, although its share price was basically unchanged. The chip leader said it plans to introduce chips that will allow video conferencing on mobile phones and DVD-quality video playback on handheld devices.
On the downside, Real Estate Investment Trusts (REITs) and homebuilder stocks fell on worries about the inevitable rise in interest rates from current historic lows and the impact of falling bond prices.
Among the movers, Hospitality Properties Trust (HPT: down $2.38 to $40.03, Research, Estimates) lost 5.6 percent and Kimco Realty Corporation (KIM: down $3.33 to $42.44, Research, Estimates) lost 7.3 percent
Also on the downside, mortgage lender NovaStar Financial (NFI: down $16.68 to $37.50, Research, Estimates) fell nearly 31 percent following a Wall Street Journal article that discussed the company's recent failure to comply with state licensing rules In Nevada and elsewhere and the impact this could have on its business. Other lenders fell as well, including New Century Financial (NCEN: down $2.50 to $46.35, Research, Estimates) and American Home Mortgage Investment (AHH: down $0.94 to $24.10, Research, Estimates), down 4 percent.
Additionally, Dow component Walt Disney (DIS: down $0.55 to $25.70, Research, Estimates) fell 2.1 percent after its historic epic "The Alamo" had a poor box office opening over the weekend. The film cost more than $100 million to make and earned less than $10 million in its first week.
However, most Dow components gained. Caterpillar (CAT: up $1.77 to $83.75, Research, Estimates), Boeing (BA: up $0.80 to $42.15, Research, Estimates), DuPont (DD: up $0.63 to $44.06, Research, Estimates), Exxon Mobil (XOM: up $0.66 to $43.11, Research, Estimates) and 3M (MMM: up $1.19 to $83.62, Research, Estimates) were the biggest advancers.
DuPont said Monday that it will cut about six percent of its staff as part of its previously-announced cost-cutting initiative.
Market breadth was mixed and volume was light. On the New York Stock Exchange, where 1.09 billion shares traded, decliners and advancers were evenly split. On the Nasdaq, gainers beat losers by nine to seven, with 1.46 billion shares changing hands.
Treasury prices fell, pushing the 10-year note yield up to 4.23 percent from 4.18 percent late Thursday. The declines related to the stock market gains but also to indications that interest rates will rise sooner rather than later.
The dollar was lower versus the yen and little changed versus the euro.
Among commodities markets, NYMEX light sweet crude oil futures rose 70 cents to settle at $37.84 a barrel, boosting oil stocks. COMEX gold gained 20 cents to settle at $420.90.
In international trading, Asian markets ended mostly higher, while most European markets were closed for the Easter holiday.
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