S&P hits fresh all-time high; energy falls 2.5 percent

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U.S. equities traded higher on Monday, the first day of the month, amid falling oil prices while investors digested economic data.

The Dow Jones industrial average traded 20 points higher, with Apple and Goldman Sachs contributing the most gains. The S&P 500 traded about 0.1 percent higher, despite energy falling more than 2.5 percent. The benchmark index hit a new all-time intraday high. Earlier, the Dow and S&P struggled for gains.

The Nasdaq composite held about 0.6 percent higher, as the iShares Nasdaq Biotechnology ETF traded near its highest level in more than six months.

“I think the economic news was spot on. There’ a little disappointment in construction spending, but it’s tough for that kind of month-to-month data, since it factors in weather” and other elements, said Kim Forrest, senior equity analyst at Fort Pitt Capital.

The ISM manufacturing index came in at 52.6, slightly below Reuters’ estimate of 53. Any number above 50 indicates expansion. The Markit PMI manufacturing index reading for July came in at 52.9. Construction spending for June declined 0.6 percent.

“Bottom line, notwithstanding the slight decline [month over month], manufacturing in the US has stabilized with the ISM index above 50 for the 5th straight month and a touch above the 6 month average of 51.5,” said Peter Boockvar, chief market analyst at The Lindsey Group.

Meanwhile, oil prices were under pressure Monday, with U.S. crude futures falling more than 3 percent to around $40.25 a barrel.

“We’ve had a breakdown in the correlation between oil and the market since we broke above $40,” said Randy Frederick, managing director of trading and derivatives. “If we break below $40, that could be a problem.”

U.S. crude has fallen from about $46.50 a barrel to its current levels in just ten days, according to FactSet.

“To go from $50 to $40 is essentially a bear market,” said Jack Ablin, chief investment officer at BMO Private Bank.

Investors will also keep an eye on more corporate quarterly reports as earnings season carries on. “I think that what’s going to happen this week will be heavily dependent on earnings,” said Maris Ogg, president at Tower Bridge Advisors.

Drilling contractor Diamond Offshore reported earnings per share before the bell that were 3 cents above estimates, while movie theater operator AMC Entertainment missed expectations by 2 cents. Williams Cos., General Growth Properties and Vornado Realty are among the firms scheduled to report after the bell.

Later this week, AIG, Tesla Motors, Kraft Heinz and LinkedIn, among others, will report earnings for their latest quarters.

As of Friday’s close, 63 percent of S&P 500 companies had reported second-quarter results, Nick Raich, CEO at The Earnings Scout, said in a note to clients. “For current stock prices, what happened during the 2Q 2016 no longer matters. Instead, it is all about the direction of 3Q 2016 EPS expectations,” he said.

Raich said that earnings-per-share growth expectations had fallen to 0.87 percent from 1.35 percent last week. “At a similar point in time last quarter, [second-quarter] 2016 EPS growth expectations were -2.64%, which indicates growth rates are likely to improve more in the [second half] of 2016.”

U.S. Treasury prices fell broadly, with the two-year yield rising to 0.66 percent and the benchmark 10-year yield trading near 1.49 percent. The dollar rose slightly against a basket of currencies — after falling about 2 percent last week — with the euro trading near $1.118 and the yen at 102.3.

This week will feature July’s U.S. jobs report, something investors will eye closely as they gauge what the Federal Reserve’s next monetary policy move will be.

That said, Tower Bridge’s Ogg said she doesn’t expect the central bank to move rates higher in the near term. “This is one of the most gutless Fed’s I’ve ever seen. My opinion is the Fed should’ve raised rates a long time ago,” she said.

“We’re going to get a fair amount of economic data globally, but I think the real exclamation point is going to be Friday,” BMO’s Ablin said.

Overseas, Asian equities mostly climbed, with the Nikkei 225 and the Hang Seng advancing 0.4 percent and 1 1.09 percent, respectively. However, Chinese stocks fell broadly, with the Shanghai composite shedding nearly 1 percent as trades digested Chinese PMI data.

European stocks traded mostly lower, with the German Dax falling about 0.1 percent and the FTSE 100 sliding 0.3 percent. European banks, meanwhile, fell as traders reacted to banking stress tests in the region.

TheDow Jones industrial average traded 16 points higher, or 0.1 percent, at 18,446, with Pfizer leading advancers and ExxonMobil the greatest laggard.

The S&P 500 rose 2 points, or 0.19 percent, to 2,175, with health care leading six sectors higher and energy the greatest laggard.

The Nasdaq rose 31 points, or 0.62 percent, to 5,194.

U.S. oil prices fell 96 cents, or 2.33 percent, to $40.63 a barrel.

The CBOE Volatility index (VIX), widely considered the best gauge of fear in the market, traded higher, near 13.

Advancers were a step ahead of decliners at the New York Stock Exchange, with an exchange volume of 290 million and a composite volume of 1.24 billion in late-morning trade.

Gold futures rose $1.40 to $1,358.90 per ounce.

On tap this week:

*Planner subject to change.

Monday

Earnings: Williams Cos

Tuesday

Earnings: Procter & Gamble, Pfizer, Cummins, Honda Motor, AIG, CVS Health, Aetna, Archer Daniels Midland, Genworth Financial, Seagate Technology, Royal Caribbean, Avon Products, Electronic Arts, Newfield Exploration, Solar Capital, Etsy, Fitbit, Steve Madden, Tableau Software, La Quinta

July vehicle sales

8:30 a.m. Personal income

Wednesday

Earnings: Time Warner, Tesla Motors, Allstate, Agrium, Continental Resources, Virtu Financial, Clorox, Transocean, Marathon Oil, Kate Spade, Iamgold, Occidental Petroleum, Herbalife, Tesoro, Delphi Automotive, MetLife, 3D Systems, Sunoco Logistics, Noble Energy, Humana, HollyFrontier

8:15 a.m. ADP employment

9:45 a.m. Services PMI

Thursday

Earnings: Kraft Heinz, LinkedIn, Toyota, Siemens, Regeneron, Church & Dwight, Alcatel-Lucent, Apache, SeaWorld, Time Inc, Motorola Solutions, Priceline, Symantec, Activision Blizzard, FireEye, Zillow, Weight Watchers, Lionsgate, El Pollo Loco, Zynga

8:30 a.m. Initial claims

10 a.m. Factory orders

Friday

Earnings: Weyerhaeuser, Allianz, Virgin America, Buckeye Partners, Liberty Interactive

8:30 a.m. Employment report; international trade

3 p.m. Consumer credit