S&P 500, Nasdaq close at all-time highs ahead of inflation data and second-quarter earnings reports

The S&P 500 and Nasdaq Composite closed higher on Monday and notched fresh records as Wall Street prepares for fresh inflation data and the start of the second-quarter earnings season.

The broad market index added 0.10% to close at 5,572.85, while the technology-heavy Nasdaq advanced 0.28% to 18,403.74. The Dow Jones Industrial Average pulled back 31 points, or 0.08%, to finish the session at 39,344.79.

— Brian Evans

Apple is on course to close at a new all-time high on Monday, surpassing Friday’s previous high of $226.34, its fifth consecutive record close going back to Monday, July 1.

Apple also touched an all-time intraday high of $227.70 on Monday, its fourth new, all-time intraday peak.

— Scott Schnipper

The merger and acquisition market outlook is bright regardless of who wins the presidency and control of Congress in November, Morgan Stanley told clients Monday.

“M&A cycles are driven by market, macro & lending conditions,” said analysts led by Ariana Salvatore. “Elections can matter too. This time, we see a robust M&A cycle ahead in either a [Democratic or Republican] win. A D win would likely be supportive of the current strong economy, a key driver for M&A. In a dealmaking context, an R win potentially favors a more supportive regulator.”

Politics won’t stop a revival in mergers and acquisitions, Morgan Stanley said in a 20-page report, citing last year’s lowest level of global M&A, “adjusted for the size of the economy, in 30+ years. We have high conviction that the cycle is currently reversing in a significant way. ‘Political uncertainty’ around antitrust enforcement and geopolitical implications are a challenge at the margin, but we don’t see it changing the broader trend, as activity is already moving higher YTD.”

The multiyear recovery that Morgan Stanley foresees, starting in 2024, will be driven by “[u]nusually depressed volumes, strong equity markets, open new issue markets, incoming rate cuts and the bottom-up expectations of our industry analysts,” all of which will offset any political headwinds, they said.

— Scott Schnipper

Goldman Sachs analysts are bullish on Wells Fargo ahead of the bank’s quarterly report on Friday, seeing upside to net interest income guidance and earnings. Additionally, Goldman’s derivatives research team sees an options trade opportunity around the earnings report.

Shares of Wells Fargo have been a long-term underperformer as the bank is still laboring under regulatory restrictions related to its fake accounts scandal. However, the stock is on a bit of a rebound in 2024, up about 20% year to date.

— Jesse Pound

The “Magnificent 7” should not be overshadowing other pockets of opportunities in the broader market, according to investor Richard Bernstein.

“People are really overlooking opportunities … [Mag 7] do not deserve the amount of attention the valuations are getting,” Bernstein, CEO and chief investment officer of Richard Bernstein Advisors, said Monday on CNBC’s “Power Lunch.”

Bernstein, formerly chief investment strategist at Merrill Lynch & Co., noted that by the end of the year, Mag 7 earnings growth is set to be slower than that of the Russell 2000 small-cap index and emerging markets. He added that only 21% of the companies in the S&P 500 have outperformed the broad market index year to date through July 5, which he said would be narrower than during the tech bubble.

While most investors’ eyes tend to be on the big-name batch of tech stocks, the investor advised reallocating capital to industrials, energy and materials sectors.

— Pia Singh

There were 17 S&P 500 stocks notching fresh highs through midday trading on Monday, including Dow components Amazon, Apple and Goldman Sachs.

Consumer-oriented companies such as TJX Companies and Costco also hit all-time highs, going back to their public debuts in 1987 and 1985, respectively.

Corning was an outperformer, up 12%. It was trading at levels not seen in roughly two years.

Here are some of the names hitting fresh highs.

• Meta Platforms (META) trading at all-time-high levels back to its initial public offering in May 2012
• Amazon.com (AMZN) trading at all-time-high levels since back to its IPO in May 1997
• TJX Companies (TJX) trading at all-time highs back to its IPO in 1987
• Royal Caribbean (RCL) trading at all-time-high levels back to its IPO in April 1993
• Costco (COST) trading at all-time-high levels back to its IPO in December 1985
• Goldman Sachs (GS) trading at all-time-high levels back to its IPO in May 1999
• Intercontinental Exchange (ICE) trading at all-time-high levels back to its IPO in November 2005
• Moody’s (MCO) trading at all-time highs back to its spin-off from Dun & Bradstreet in 2000
• Eli Lilly (LLY) trading at all-time-high levels back to 1952 when the company offered its first public shares of stock

— Sarah Min, Chris Hayes

In a research note Monday, Jefferies analyst Michael Yee said large pharmaceutical players are increasingly partnering with artificial intelligence drug discovery firms. At the same time, more money is flowing to private companies in the space.

“The top 25 private AI drug discovery cos have raised over $4B recently and pharma is actively accelerating its collaboration across the landscape to further leverage these technologies across the R&D process,” Yee wrote.

While Yee’s note highlights some of the private companies in the space such as Xaira Therapeutics, XtalPi and Generate:Biomedicines, CNBC Pro recently looked at some of the public companies in the category. AI drug discovery stocks have struggled year to date, but updates on clinical trials expected later this year could serve as a catalyst for companies such as Recursion Pharmaceuticals.

— Christina Cheddar Berk

The VanEck Semiconductor ETF rose 2% Monday, putting it on pace for its sixth straight positive day for the first time since April 29.

Intel gained more than 4%, leading the exchange-traded fund’s gains, followed by Taiwan Semiconductor Manufacturing Co. up 3.3% and Nvidia’s 2.8% jump.

Year to date, the ETF is up around 57%.

— Hakyung Kim

The S&P 500 is up in each of the first five sessions this month, rising 2% to start July.

The last time it rose at least five days to start the month was back in November — which was the start of a super month — when it was up almost 9% by the time the month wrapped up.

But a lengthy winning streak to start a month has not necessarily been an early guarantee for a super strong month. Since 2010, there have been a dozen instances that the S&P 500 has started the month with five consecutive gains. Three of those times, the index actually closed lower for the month. Only five of those times did the S&P 500 end the month with a gain of 5% or more.

— Robert Hum

Here are the stocks on the move midday:

• Paramount Global — The media and entertainment company shed 2% after it agreed to merge with Skydance Media. Skydance and its financial backers will invest more than $8 billion into Paramount and to acquire National Amusements, Paramount’s controlling shareholder.
• Morphic Holding — Shares rallied 75% on news that Eli Lilly will acquire the biopharmaceutical company in a $3.2 billion deal. The deal will give Eli Lilly access to Morphic’s portfolio of treatments in development, such as those for ulcerative colitis and Crohn’s disease. Shares of Eli Lilly advanced 1.3% on the news.
• Ideaya Biosciences — The stock surged 19% after the precision medicine oncology company announced it had received positive results from the phase 2 trial of its cancer treatment. The monotherapy expansion dose is being developed to treat patients with urothelial and non-small cell lung cancers.

Read the full list here.

— Sean Conlon

The energy sector has pulled back 10% since hitting a decade high in April but should regain momentum with crude oil poised to rise, according to Wolfe Research.

“This loss of leadership in the market is not a trend we foresee persisting for very long, and in fact we anticipate money coming back into the sector,” analysts Rob Ginsberg and Read Harvey told clients in a Monday research note.

U.S. crude oil has carved out “an extremely compelling multi year base,” reinforcing Wolfe’s bullishness for the energy sector, the analysts said. West Texas Intermediate is positioned to break out above $90 per barrel, they said.

Consol Energy is riding a multiyear uptrend, setting the stock up nicely for a breakout through $110 per share, according to the analysts. Consol is currently trading at $101.43 per share.

— Spencer Kimball

Former Dallas Fed President Robert Kaplan expects his former colleagues to lay the groundwork for an interest rate cut in September.

“If I were sitting in my former seat, I’d be getting ready to cut the rates in September,” Kaplan said Monday on CNBC’s “Squawk Box.” “I wouldn’t make any commitments between now and then, but I think they’re going to position to cut rates in September, and they’ll take it then one meeting at a time.”

Kaplan served at the Dallas Fed until 2021 and now is a vice chairman at Goldman Sachs.

— Jeff Cox

Inflation expectations declined in June as consumers expect a slowing rate of price increases for gas, food and a host of other expenses, according to a New York Federal Reserve survey Monday.

The central bank district’s Survey of Consumer Expectations showed the inflation outlook at both the one- and five-year horizons decreased 0.2 percentage points, to 3% and 2.8%, respectively. However, the three-year outlook edged up to 2.9%.

Internally, the expectations for price increases in food and energy both declined 0.5 percentage points, to 4.8% and 4.3%, respectively. The outlook for medical care costs fell 1.7 percentage points to 7.4% while rent inflation expectations slumped to 6.5%, down 2.6 percentage points.

— Jeff Cox

S&P 500 earnings could increase 7.4% as second-quarter results hit Wall Street earnest on Friday, according to UBS.

Assuming a typical pace of revisions/surprises, growth is likely to finish at 10.5-11.0%,” UBS strategist Jonathan Golub wrote Monday. “By contrast, EPS is expected to grow 5.0% and 2.0% when measured on an equal weighted basis or if TECH+ stocks are excluded.”

— Brian Evans

U.S. crude oil fell 1% on Monday as traders monitored the impact of Hurricane Beryl on Gulf Coast refining, production and export infrastructure.

Hurricane Beryl made landfall near Matagorda, Texas, as a Category 1 hurricane with maximum sustained winds of 80 miles per hour, according to the National Hurricane Center. Matagorda is about 150 miles northeast of Corpus Christi, a leading crude export facility in the U.S.

Shell shut production and evacuated personnel from its Perdido platform about 200 miles south of Galveston, according to a company statement Friday.

— Spencer Kimball

Stocks opened higher on Monday as investors ready for inflation data and the start of the second-quarter earnings season this week.

The S&P 500 and the Nasdaq Composite advanced 0.1%, while the Dow Jones Industrial Average gained 144 points, or 0.3%.

— Brian Evans

Check out the companies making headlines before the bell.

• Morphic Holding — Shares surged more than 75% on news that Eli Lilly will acquire the biopharma company in a $3.2 billion deal. The deal will give Eli Lilly access to Morphic’s portfolio of treatments in development, such as those for ulcerative colitis and Crohn’s disease. Eli Lilly shares inched up 0.2% on the news.
• Paramount Global — Shares added 2% following the announcement Sunday that the media and entertainment company reached a deal to merge with Skydance Media.
• SolarEdge — The energy company rose 5% after Bank of America upgraded shares to neutral from underperform, citing an attractive entry point for investors. However, the firm said it is looking for “more tangible” margin and cash flow recovery. 

The full list can be found here.

— Hakyung Kim

French stocks moved higher on Monday as markets reacted to a surprise win for the left in the country’s parliamentary election.

The CAC 40 erased earlier losses to rise 0.5% by 10:00 a.m. London time (5 a.m. ET). The euro was flat against the dollar, and trading in bond markets was also relatively muted.

François Digard, head of French equity research at Kepler Cheuvreux, said a hung parliament was what the market was expecting.

“You have a hung parliament as expected so last week, the market has played this out. … It was just expected to be more right-wing and at the end it is left-wing,” he told CNBC on Monday.

Read the full story here.

— Katrina Bishop

Boeing agreed to plead guilty to a criminal fraud charge months after federal prosecutors alleged the planemaker violated a 2021 settlement that shielded it from prosecution.

Under the deal announced late Sunday, Boeing would pay a $243.6 million fine, install an independent compliance monitor for three years and invest at least $455 million in compliance and safety programs. The agreement needs to be approved by a federal judge before taking effect.

In 2021, Boeing reached a $2.5 billion settlement with the Justice Department over charges related to the fatal 737 Max crashes. That agreement included the original $243.6 million criminal fine, compensation to airlines and a $500 million fund for victims’ families. A lawyer for the victims’ family members said he plans to ask the federal judge on the case to reject the deal and set the matter for public trial.

— Leslie Josephs, Christine Wang

European stocks ticked higher in morning trade on Monday as markets reacted to an expected hung parliament in France after a surprise win for a left-wing coalition of parties.

The French CAC 40 erased earlier losses to rise 0.2% by 8:35 a.m. London time (3:35 a.m. ET). The euro was flat against the dollar.