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U.S. Stocks Surge to Record Highs on Earnings

Stocks rally, S&P 500 hits new record highs on better than expected earnings.

The U.S. stock market rallied on Monday, with the S&P 500 Index (SPY) shattering new all-time highs on better than expected quarterly earnings.

All of Wall Street’s major indices finished in positive territory. The large-cap S&P 500 Index rose 0.6% to 3,039.35, a new record high. Seven of 11 primary sectors contributed to the gains, with communication services leading the pack. Information technology and healthcare also outperformed the broader market.

Even with the record-breaking rally, several sectors under-performed. Shares of utilities and real estate companies plunged more than 1%. Consumer staples also finished lower.

The Dow Jones Industrial Average (DIA) rallied 132.25 points, or 0.5%, to finish at 27,090.31.

Meanwhile, the technology-focused Nasdaq Composite Index (QQQ) surged 1% to 8,325.99.

A measure of implied volatility known as the CBOE VIX (VXX) traded within a narrow range on Monday, reflecting underlying calm in the stock market. VIX would eventually settle up 3.1% at 13.04 on a scale of 1-100 where 20 represents the historic average.

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Corporate earnings surprised to the upside on Monday, with AT&T (NYSE:T) and Dow blue-chip Walgreens Boots Alliance (NYSE:WBA) reporting better than expected results. While earnings have largely surpassed estimates this season, they are track for their third consecutive quarter of year-over-year declines. That marks the longest stretch of earnings declines in over three years.

As of Friday, the blended earnings decline for S&P 500 companies was 3.7% compared with a year ago, according to financial research firm FactSet.

The Final Word: Investors are gearing up for an active week with plenty of earnings reports and economic data scheduled for release. U.S. nonfarm payrolls headline the economic calendar on Friday.