US stocks started the trading week on a very positive note, with the market buoyed by gains in financial as well as technology shares. As the earnings season gains momentum, investors are eagerly awaiting the upcoming reports from major companies, including Tesla and Netflix in the technology sector, as well as Bank of America, Morgan Stanley, and Goldman Sachs in the financial sector.

Analysts and investors will closely examine the earnings reports and company outlooks, as they play a crucial role in determining stock valuations. According to Refinitiv data, earnings for the quarter are expected to decline by 8.1%, a larger decline than the initial estimate of 5.7% at the beginning of the month.

Stephen Massocca, Senior Vice President at Wedbush Securities in San Francisco, highlighted the significance of earnings and dividends in valuing stocks. He expressed confidence in the overall market, stating that it remains reasonably priced, if not undervalued. However, Massocca also expressed concerns about potential actions by the Federal Reserve that could have unintended negative consequences for the economy while attempting to address inflation.

In recent weeks, US equities have rallied, with both the S&P 500 and Nasdaq reaching 15-month highs. Economic data indicating a resilient economy, cooling inflation, and a solid labor market have contributed to this positive market sentiment.

The market has largely priced in a 25-basis-point interest rate hike by the Federal Reserve at its upcoming policy meeting. According to CME’s FedWatch Tool, market expectations for the rate hike currently stand at 97.3%.

On Monday, the Dow Jones Industrial Average rose by 76.32 points or 0.22%, closing at 34,585.35. The S&P 500 gained 17.37 points or 0.39%, ending at 4,522.79, while the Nasdaq Composite added 131.25 points or 0.93%, reaching 14,244.95.

Tesla, one of the prominent technology companies, saw a 3.20% increase after announcing the completion of its first Cybertruck after a two-year delay.

In contrast, Ford Motor experienced a 5.94% decline as the automaker reduced the price of its F-150 Lightning trucks, contributing to an intensifying price war among electric vehicle manufacturers. General Motors and Rivian also saw decreases in their stock prices as a result.

Apple recorded a 1.73% increase after Morgan Stanley raised its target price on the company, citing a positive outlook on India as an emerging growth driver for the tech giant.

Bank shares recovered from the losses experienced on Friday, with the S&P 500 bank index rising by 1.76% and the KBW regional bank index advancing by 1.99%.

Activision Blizzard observed a 3.49% increase following Microsoft’s announcement that it would continue to support the popular game “Call of Duty” on PlayStation following its acquisition. Microsoft was also granted a two-month pause in its appeal over Britain’s block against the deal, allowing more time for negotiations.

Conversely, AT&T shares slumped by 6.69% to a 30-year low after Citi downgraded the telecom operator due to concerns related to lead cables left buried in the United States. Verizon also saw a decline of 7.50%, reaching its lowest intraday level in nearly 13 years.

Advancing issues outnumbered declining ones on the New York Stock Exchange (NYSE) by a ratio of 1.42-to-1, while on the Nasdaq, the ratio favored advancers at 1.75-to-1.

Overall, the S&P 500 posted 60 new 52-week highs and 4 new lows, while the Nasdaq Composite recorded 150 new highs and 77 new lows.

With a total volume of 9.54 billion shares, slightly below the 10.92 billion average for the past 20 trading days, the trading session reflected good and active market participation.