Wall Street opens up, Nasdaq closer to record ahead of Apple earnings
(Reuters) -- Wall Street was higher at the open on Monday and the Nasdaq inched closer to its record intraday high ahead of Apple's results after the close.
Investors this week will also be closely watching the results of the two-day U.S. Federal Reserve meeting, starting Tuesday, for clues on when interest rates could be hiked.
On Monday, data showed that U.S. services sector expansion eased slightly in April from a seven-month high in March on a dip in new business growth.
"So far, both the economic data and earnings data has been weaker-than-expected and so that means that an imminent rate hike is most likely off the table," said Adam Sarhan, chief executive of Sarhan Capital in New York.
A slew of recent sub-par indicators have prompted analysts to downgrade their view of the U.S. economic outlook and to push back expectations of when the Fed will hike rates for the first time since June 2006 until later this year.
The Nasdaq hit a intraday high of 5119.828, the closest it has reached to its record high of 5132.52, hit in March 2000. Both the Nasdaq and the S&P 500 closed at a record highs on Friday after strong results from tech giants.
Apple shares rose 1.69 percent to $132.48 in early trading. Analysts expect Apple's quarterly revenue to rise 23 percent to $56.07 billion, according to Thomson Reuters data.
"Apple is an undervalued growth stock and has been for many, many years," Sarhan said. "Even though it is the world's largest company, its price-to-earnings ratio is still below that of the S&P 500."
Apple trades at 14.3 times forward 12-month earnings, while the S&P 500 trades at 16.7 times, according to Thomson Reuters StarMine data.
At 9:57 a.m. EDT the Dow Jones industrial average was up 71.3 points, or 0.39 percent, at 18,151.44, the S&P 500 was up 7.38 points, or 0.35 percent, at 2,125.07 and the Nasdaq Composite was up 23.32 points, or 0.46 percent, at 5,115.41.
Applied Materials slumped 6.8 percent to $20.30 after the chip equipment maker's proposed $10 billion merger with Tokyo Electron was abandoned over U.S. regulatory concerns.
Celladon plunged almost 80 percent to $2.80 after the company said its heart failure gene therapy, Mydicar, failed to meet its main goals in an important trial.
Mylan fell 3.5 percent to $73.18 after it rejected Teva Pharmaceutical's unsolicited $40 billion takeover offer, saying it "grossly undervalues" the company. Teva shares lost 1.4 percent.
U.S. listed shares of Deutsche Bank slumped 4.2 percent to $32.79 after the German bank's biggest strategic overhaul got a thumbs down from investors on Monday who judged it too little too late.
Advancing issues outnumbered declining ones on the NYSE by 1,949 to 789, for a 2.47-to-1 ratio on the upside; on the Nasdaq, 1,579 issues rose and 846 fell for a 1.87-to-1 ratio favoring advancers.
The benchmark S&P 500 index was posting 12 new 52-week highs and no new lows; the Nasdaq Composite was recording 60 new highs and 20 new lows.