Wall St Flips Into Positive Territory, BofA Gains On Strong Earnings

U.S. stocks moved into positive territory in early afternoon trading on Monday, as a profit beat from Bank of America rounded out earnings season for the big Wall Street banks and added further momentum to financial stocks.

The upward swing reversed earlier declines caused by bond yields surging to three-year highs, highlighting investor nerviness on expectations of an aggressive tightening in monetary policy in the coming weeks and months.

The broader S&P 500 banks index rose 2.2%, lifted by a 4.2% gain in shares of Bank of America Corp.

The second-largest U.S. bank by assets reported strong growth in its consumer lending business, although its investment banking unit took a hit from a slowdown in deal making.

"The earnings season so far has been living up to its expectations," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"There has been some negative guidance but, at large, it looks like corporate America is likely to be able to live with higher inflation and the higher cost of money."

Market participants are bracing for a barrage of earnings this week that will help them assess the impact of the Ukraine war and a spike in inflation on company financials.

On deck before the week is out are Netflix, Tesla, Johnson & Johnson and International Business Machines.

Megacap stocks such as Apple and Amazon.com slipped as the benchmark 10-year Treasury yield climbed to 2.85%, after hitting 2.884% earlier on Monday, the highest since Dec. 2018.[US/]

Shares of market-leading technology and growth companies have come under pressure as expectations of a string of interest rate hikes threaten to erode their future earnings.

Tesla, however, rose 2.1% as it prepares to reopen its Shanghai plant following a near three-week COVID shutdown.

A majority of the 11 major S&P sectors were higher, led by energy stocks, which rose 1.9%. Crude prices gained and Brent topped $114 a barrel on outages in Libya deepening concerns over tight global supply. Refining names were among the best performers, with Valero Energy Corp, Phillips 66 and Marathon Petroleum Corp up between 3.8% and 5%. [O/R]

Overall, trading volumes were thin after the Easter break, with European markets remaining shut on Monday.

By 1:54 p.m. ET, the Dow Jones Industrial Average was up 103.83 points, or 0.3%, to 34,555.06, the S&P 500 gained 13.99 points, or 0.32%, to 4,406.58 and the Nasdaq Composite added 25.15 points, or 0.19%, to 13,376.23.

Charles Schwab Corp fell 8.7% after the financial services company missed quarterly profit estimates.

Twitter rose 5.2% as the micro blogging site adopted "poison pill" on Friday to restrict Tesla CEO Elon Musk from raising his stake to beyond 15% for a one-year period.

Didi Global Inc slumped 17.9% after the Chinese ride hailing company said it will hold an extraordinary general meeting on May 23 to vote on its delisting plans in the United States.