(Reuters) – U.S. stock indexes opened higher on Monday, with the Dow hitting a record high, as investors remained optimistic on corporate earnings in the second quarter.
Investors have been counting on earnings to support the relatively high valuations for equities, with the S&P 500 trading at about 18 times earnings estimates for the next 12 months, above its long-term average of 15 times.
Of the 289 S&P 500 companies that reported results until Friday, 73 percent of them beat analyst expectations. This is above the 71 percent average over the past four quarters, according to Thomson Reuters I/B/E/S.
The S&P 500 slipped on Friday on negative reactions to earnings reports from high-profile names such as Amazon (AMZN.O), Exxon (XOM.N) and Starbucks (SBUX.O) and a drop in shares of tobacco companies.
“We had a choppy week last week, we had a very erratic week, so coming off a erratic week, we’re getting some early morning premarket bargain hunting,” said Andre Bakhos, managing director at Janlyn Capital LLC.
“We’re not having anything coming that the markets can sink their teeth into.”
Apple Inc (AAPL.O), a part of the Dow, is expected to report quarterly results after market close on Tuesday and its performance may hold the sway over tech stocks this week.
At 9:37 a.m. ET (1337 GMT) the Dow Jones Industrial Average .DJI was up 61.07 points, or 0.28 percent, at 21,891.38, the S&P 500 .SPX was up 4.68 points, or 0.19 percent, at 2,476.78 and the Nasdaq Composite .IXIC was up 18.28 points, or 0.29 percent, at 6,392.96.
Seven of the 11 major S&P sectors were higher, with the financial index’s .SPSY 0.38 percent rise leading the gainers.
On data front, contracts to buy previously owned homes rebounded in June after three straight monthly declines.
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed last month, jumped 1.5 percent to a reading of 110.2.
The Federal Reserve of Dallas will release its monthly manufacturing…