To The Moon

Rally in Energy, Entertainment Stocks Powers Market Higher

Stocks climbed to start the week, extending the Dow's winning streak to its longest in six years, while a blowout weekend at the box office lifted cinema stocks and pointed to strength in the consumer economy.

Movie mania, led by the "Barbie" and "Oppenheimer" releases, drew more than $300 million in North American ticket sales Friday through Sunday, the latest sign U.S. households are still primed to spend. Surprising economic strength, despite the Federal Reserve's aggressive series of interest-rate hikes, has lifted the major indexes this year as more investors have shifted to bet against an imminent recession.

The broad $S&P 500(.SPX)$  rose 0.4% Monday, and the $NASDAQ(.IXIC)$  added 0.2%. The $DJIA(.DJI)$  gained 183.55, or 0.5%, its 11th consecutive day of gains.

$Mattel(MAT.US)$, the company behind "Barbie," rose 1.8%. $IMAX Corp(IMAX.US)$ gained 2.9% andgained 2.9% and $AMC Entertainment(AMC)$ stock rose 33% after a judge on Friday rejected a settlement that would have let the company issue substantially more shares.

Most investors are counting on the Fed to raise interest rates by a quarter of a percentage point Wednesday, pushing the target rate above a floor of 5.25%, up from zero at the start of last year. Rising rates have been expected to cool the economy, but the still-hot jobs market, alongside falling inflation, is helping Wall Street discount the probability of a serious downturn.

Beyond Hollywood, energy stocks added to Monday's gains, lifted by a better-than-expected profit $Chevron(CVX.US)$ posted on Sunday. Its stock added 2%, $Halliburton(HAL.US)$'s rose 3.6% and$Occidental(OXY)$ 's climbed 2.6%. Brent crude, the global benchmark for oil prices, advanced 2.1% to settle at $82.74 a barrel.

$Domino's Pizza(DPZ.US)$ beat earnings forecasts but said that same-store sales stagnated as its customers responded to higher prices. The stock eked out a 0.1% gain.

Among S&P 500 companies that had posted results before Monday, 73% have topped Wall Street's profit expectations, according to an analysis by Strategas. About a third of companies in the index will report earnings this week, including tech giants such as Microsoft, Meta and Alphabet that have been crucial drivers of this year's market strength.

As stocks have rallied, the price of the S&P 500 index relative to its 12-month expected earnings has risen to well above long-run averages, said Michael Sheldon, chief investment officer at RDM Financial Group. He sees that as a signal investors are expecting a sizable boost to corporate performance next year.

Equities' gains have come despite rising yields on U.S. Treasury debt, which last year helped send the stock market into a tailspin by offering attractive compensation for holding securities deemed some of the safest available. More recently, forecasts that the Fed is near the end of its cycle of interest-rate hikes have capped traders' sense of how much more Treasury yields might rise, because yields are closely associated with expectations for Fed interest-rate policy.

Yields, which move contrary to bond prices, finished Monday little changed. The yield on the 10-year Treasury note ended at 3.855%, versus 3.837% Friday. The 2-year yield settled at 4.893%, up from 4.846% Friday.

Traders' positioning in futures markets suggests they see an 83% probability the Fed will raise rates this week but skip another rate increase at their next meeting in September, according to CME Group's market tracker. In June, central bankers' own projections pointed to one additional quarter-point rate increase this year after July's.

As Fed policy expectations stabilize, corporate performance is becoming a more important driver of the market's next leg, said Jay Hatfield, chief executive at Infrastructure Capital Management.

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