Tech lifts S&P 500, Nasdaq amid inflation, China growth worries

(Reuters) -U.S. stocks rose on Monday on gains in heavyweight technology companies, although sentiment remained fragile due to slowing economic growth in China and concerns of elevated inflation due to a relentless surge in oil prices.

FILE PHOTO: Traders work on the main trading floor of the New York Stock Exchange shortly after the opening bell of the trading session in the Manhattan borough of New York City, January 7, 2016. REUTERS/Brendan McDermid

Eight of the 11 major S&P 500 sectors rose, led by consumer discretionary and followed by energy, which tracked Brent crude oil to its highest since October 2018. [O/R]

Apple Inc, Google-parent Alphabet, Amazon.com Inc, Tesla Inc and Facebook Inc, added between 0.3% and 3% to provide the biggest boost to the S&P 500 and the Nasdaq.

The iPhone maker is expected to unveil new Mac laptop computers with more powerful processor chips at an event later in the day.

However, the global sentiment was dampened by China recording its slowest pace of economic growth in a year in the third quarter, hurt by power shortages and wobbles in the property sector. [MKTS/GLOB]

“There is some weak data out of China, which is concerning on a global basis, and then market participants came into this earnings with a very pessimistic view but banks dramatically exceeded expectations,” said Thomas Hayes, managing member at Great Hill Capital Llc in New York.

In the days ahead, investors will keep a close eye on how Corporate America mitigates the impact on earnings from supply chain disruptions, labor shortages and higher costs, especially in the wake of rising oil prices.

Forecast-beating results from big U.S. lenders last week set a positive tone for third-quarter earnings season, with analysts expecting S&P 500 earnings to show a 32% rise from a year ago, according to Refinitiv data.

“The wall of earnings over the next two weeks will be key as to the market’s next move; a continuation of the positive commentary should help keep the rally well-supported,” said Chris Beauchamp, chief market analyst at IG.

“Judging by the figures so far it seems like earnings season will be the catalyst for further gains that eluded investors throughout September and early October.”

Johnson & Johnson, insurer Travelers, Netflix Inc, Verizon Communications, oilfield services cos Baker Hughes Co, Schlumberger NV, Tesla Inc and Intel Corp are some of the companies set to report quarterly results this week.

At 12:16 p.m. ET, the Dow Jones Industrial Average was up 1.94 points, or 0.01%, at 35,296.70, the S&P 500 was up 11.08 points, or 0.25%, at 4,482.45 and the Nasdaq Composite was up 67.77 points, or 0.45%, at 14,965.11.

Walt Disney slipped 2.9% after Barclays downgraded the media giant’s stock to “equal weight” from “overweight”.

Dynavax Technologies rose 2.6% after French biotech company Valneva SE reported positive results from its late-stage trial of its COVID-19 vaccine candidate VLA2001, using company’s CpG 1018 adjuvant.

Advancing issues outnumbered decliners by a 1.04-to-1 ratio on the NYSE. Declining issues outnumbered advancers for a 1.06-to-1 ratio on the Nasdaq. The S&P index recorded 33 new 52-week highs and no new low, while the Nasdaq recorded 48 new highs and 93 new lows.

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